According to the Center for Automobile Research, killing NAFTA could cost upwards of 40,000 jobs in the auto industry across North America
Donald Trump officially begins a new job on Jan. 20. However, tens of thousands of auto industry workers could soon be out of work across North America.
The warning from the Michigan-based Center for Automotive Research comes as reports indicate the United States president-elect will reform or even kill the North American Free Trade Agreement as soon as he takes office. One threat includes a 35 per cent tariff on vehicles built in Mexico.
The CAR report, NAFTA Briefing: Trade benefits to the automotive industry and potential consequences of withdrawal from the agreement, estimates a loss of 6,700 assembly jobs across the continent should the plan be put in place.
And that’s just the start, it warns.
Lost import sales could mean the loss of about 20,000 parts jobs in the U.S. The rising cost of parts imported from Mexico would mean an additional 11,000 assembly jobs lost.
The North American Free Trade Agreement “allows automakers to take advantage of best cost production and lower supply chain risk, thus ensuring automotive production remains in North America,” the report said.
Furthermore, it added, “any move by the United States to withdraw from NAFTA or to otherwise restrict automotive vehicle, parts and components trade within North America will result in higher costs to producers, lower returns for investors, fewer choices for consumers, and a less competitive U.S. automotive and supplier industry.”
The report lists China, Japan and South Korea as viable alternatives to replace Canada and Mexico as top suppliers to the U.S. for parts.
NAFTA “a convenient whipping boy”
The AIA published an information paper to its members about the agreement called, What’s next for NAFTA? The AIA takes no position on the matter and offered the paper as a way to provide an overview of factors to consider when debating the fate of NAFTA.
The paper included an excerpt from an April 2008 article from Policy Options, a public forum division of the Institute for Research on Public Policy in Montreal. Its article noted this isn’t the first time NAFTA has become “a convenient whipping boy” for government leaders. The article highlights opposition from former U.S. president Bill Clinton and former Canadian prime minister Jean Crétien before each came to power. Eventually, “they embraced the agreement, accepted side agreements on labor and the environment and, in the case of President Clinton, fought hard to gain congressional approval,” it states.
“No wonder we need first to consider whether and how campaign rhetoric may be tempered by the reality of government.”
“Worst trade deal,” says Trump
Trump has ripped NAFTA, calling it “the worst trade deal in history” and stated his desire for more U.S.-friendly deals. Trump most recently made tariff threats against German automaker BMW. Days ago, a Trump spokesmansuggested Canada would not be immune to similar measures. Canada and Mexico are the largest suppliers of automotive parts to the U.S., accounting for $60 billion.