Canadian and Mexican officials will reject U.S. demands to change the rules for determining when a product can be labeled as “made in America” or “made in the U.S.A” as part of the renegotiations for the North American Free Trade Agreement on Monday.
Canada and Mexico will argue that the language that U.S. wants would damage the auto industry, whose supply chain is spread throughout the continent, according to an official with knowledge of the talks.
The Trump administration is pushing to add an expiration clause to NAFTA as well as to increase the percentage of an automobile’s inputs, such as parts and labor, that come from the U.S. or Canada to have a car be deemed to be “made in America.” Today, 62.5 percent of a car has to come from the U.S. or Canada to meet the standard, but the Trump administration wants to increase that to 85 percent and to also require that at least half be produced in the U.S.
Such demands likely would force suppliers to relocate to the U.S. to keep the labels.
It also would likely drive up costs for automakers. “If you move the content requirement to 80 percent, or even to a number lower than that, it will hit the supply chains. You would then have to deal with potentially ill-equipped suppliers that are maybe more expensive,” an unnamed source in Canadian government told Reuters.
President Trump has long complained that NAFTA’s rules hurt domestic jobs.
Refusing to provide a counter-offer is a gamble that increases the odds that the ongoing negotiations fail. Trump threatened to pull the U.S. out of the 1993 trade deal only to have been talked out of it by Mexico’s and Canada’s leaders. U.S. business leaders are concerned that Trump will follow through on those threats if a face-saving deal is not reached.
The U.S. Trade Representative’s Office declined to comment.
