Auto Industry Groups Lobby Trump To Not Scrap NAFTA

October 24, 2017
The Chevrolet Tahoe is assembled in the U.S., Mexico and other parts of Latin America.

Lobby groups representing automakers, suppliers and dealerships began a campaign on Tuesday aimed at convincing President Donald Trump that the North American Free Trade Agreement is worth keeping.

Trade associations representing a cross-section of corporations, including General Motors Co. and Ford Motor Co. launched a coalition called “Driving American Jobs,” and began an advertising campaign attempting to convince American voters and the White House that the country would lose jobs if it scrapped or modified NAFTA under a current set of proposals.

Trump has suggested the country may withdraw from the agreement between the U.S., Mexico and Canada. American trade representatives in renegotiation talks proposed requiring vehicles assembled in North America to increase the percentage of parts they get from factories in the region to 85 percent, up from the current 62.5 percent. At least 50 percent would have to come from the U.S.

“Pulling out of NAFTA would lead to a decrease in vehicle production, a decline in jobs and an increase in what our customers spend,” Jennifer Thomas, a lobbyist for the Alliance of Automobile Manufacturers, which represents companies such as BMW, Ford and Toyota, said in a statement. “This would also have an impact on our abilities to export vehicles to foreign markets.”

Assembly lines in the U.S. having access to parts made in Mexico helps them compete with auto makers elsewhere, according to Bernard Swiecki, director of the Automotive Communities Partnership at the non-profit think tank Center for Automotive Research.

Carmakers elsewhere have their own version of Mexico, Swiecki said. For Germany, it’s Eastern Europe and Turkey. For Japan and South Korea, it’s Southeast Asia and China.  

If the current proposals go into effect or if NAFTA is scraped altogether, car companies will probably just make fewer cars in America, Swiecki said.

"You can't assume it'll just be magically be made in the United States,” Swiecki  said. “There are too many other places around the world where that is already likely to be produced from where the car companies could just pull it into the U.S."

The next round of NAFTA negotiations is scheduled for next month.