US Softening NAFTA Stance

There’s been some development on the NAFTA front as it appears that the US are softening their stance on NAFTA. A report has come out that the US trade team is looking to back down on its previously strict stance as negotiations between the United States, Canada and Mexico continue.

The unconfirmed report suggests that the US is no longer demanding that at least 50% of the content on any vehicle coming into the United States from a NAFTA country must be made up from US sourced parts. This specific clause has been a major thorn in the sides of both Mexico and Canada as they see this as a blatant attempt to shift automotive manufacturing infrastructure investments away from Canada and Mexico and back to the US.

The current North American Free Trade Agreement calls for a minimum of 62.5% of any vehicle’s content that enter the United States come from a NAFTA partner, but the Trump trade delegation has been pushing for the minimum number of NAFTA partner parts be at least 85% and that 50% of this content be directly sourced from USA manufacturing.

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The about face is welcome news for both the Mexicans and the Canadians as they have each gone on record to state that this level of US dedicated parts would be a contentious issue. The United States Trade delegation, which is led by US Trade Representative Robert Lighthizer, have been playing hard ball on this specific clause and there is no real indication as to why their position might have changed or where they hope to land on this issue. The Canadians, led by Christine Freelander, are cautiously optimistic about this change in direction but have yet to comment specifically on this latest change, but continue to publicly state that they continue to work well with both their US and Mexican counterparts.