A slight majority of investors don’t believe that President Trump would actually pull the U.S. out of the North American Free Trade Agreement, with 55 percent saying his threats to do so are posturing as part of the renegotiations of the 1993 trade deal among the U.S. Canada and Mexico.
The next round of talks will begin in Mexico Nov. 17.
Trump has repeatedly promised to pull the U.S. out of the trade pact if the current renegotiations do not yield better terms for the U.S. Many business groups fear he may follow through on those threats given that the talks have become rocky and tense. The three nations’ top negotiators traded barbs when the third round of talks concluded in Arlington, Va., last month. Chamber of Commerce President Tom Donohue has warned that a U.S. exit is a real possibility.
Nevertheless, 55 percent of investors surveyed by the Trade Leadership Coalition, a nonprofit group, agreed with the statement that the threats were “merely posturing.” Only about a third, 32 percent, believed the threats were real. Most appear to be banking that that administration knows that a pullout would harm the economy. The same survey found that 72 percent of investors said a pullout would hurt U.S. growth.
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 more generally wants to require more production in the U.S. to help drive production and jobs back to the U.S.
Canada and Mexico are resisting the demands. They are both home to many companies that form part of the U.S. auto industry supply chain. Changing the rules as the U.S. wants would severely disrupt their business.
