Mexico City, Mexico — As Trump continues his attempts to overhaul Nafta, the auto sector is sounding its own alarms saying it could end up as a lose-lose situation.
Don Walker, chief executive officer of Magna International Inc., says that Trump’s administration is pushing to increase content requirements in cars and changes such as rules of origin, which will only make things more complicated and costly.
“If the required content to hit the threshold for a Nafta vehicle is too high, people may say, ‘Look, it’s just too difficult, it’s too high, so we’ll just ship the vehicles in,’” Walker said ahead of the talks.
Signals point toward Trump putting potentially deal-breaking proposals on the Nafta table, however, the U.S. Chamber of Commerce and Mexico’s auto industry group already have spoken out against an anticipated proposal for U.S.-specific content requirements.
They said introducing a Nafta-made rule could risk disruption to the auto industry. “If the regional content is by specific country, I think it adds a lot of complexity and then every country would probably want regional content,” Walker said.
“If you have U.S. content, and Canadian content, and Mexican content, the reporting and the bureaucracy and the tracking becomes so complicated — and costly, quite frankly.”
Mark Scarpelli, chairman of the National Automobile Dealers Association, warned Tuesday in Detroit says, “Anything that raises the price of a car will affect consumers and automobile sales. We are concerned, but at the end of the day, we don’t know what the rule-making is going to be.”
Throughout his presidential campaign, Donald Trump was fixated on the auto industry and car makers investing in Mexico, and early in his presidency, criticized companies including Ford Motor Co., General Motors Co. and Toyota Motor Corp.