PRELIMINARY AGREEMENT
US accord with Mexico boosts carmakers
The preliminary agreement announced on Monday allows carmakers to import vehicles duty-free if 75% of the content is made in the US and Mexico
Judging from the increase in General Motors (GM) and Ford Motor shares, the market thinks President Donald Trump’s accord with Mexico to replace the North American Free Trade Agreement (Nafta) will enable US carmakers to carry on business as usual. This could be right, with one big caveat: the companies are going to need Canada to join the deal, too. The preliminary agreement announced on Monday allows carmakers to import vehicles duty-free if 75% of the content is made in the US and Mexico. That is up from the 62.5% minimum under Nafta. Under the US-Mexico deal, as much as 45% of parts will also have to be made by workers who are paid more than $16 an hour, according to US trade representative Robert Lighthizer. "The vast majority of vehicles made in the US, Mexico and Canada are above the requirements," said Kristin Dziczek, vice-president of industry, labour and economics at the Center for Automotive Research in Michigan. "If Canada doesn’t sign on, it’s a problem." To meet the p...
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