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Trump USMCA.jpg Getty Images
(left to right) Mexican President Enrique Pena Nieto, U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau announce USMCA trade deal in November 2018.

MBS Panelists Talk China, Canada, COVID

Some trade issues affecting the automotive industry are ongoing, such as the U.S.-China trade dispute, and others are developing, including President Trump’s revived threat to reimpose tariffs on imports of Canadian aluminum, panelist Jennifer Safavian says.

Journalist Jenny Leonard says not much was happening on the trade beat when Barack Obama was president. Not so with Donald Trump in the White House.

Trump is pursuing trade policies designed to favor workers over corporations – to the extent that under the U.S.-Mexico-Canada Agreement (USMCA), which took effect July 1, there is even a previously “unheard of” minimum-wage requirement for Mexican workers, Leonard says Tuesday during a trade-policy panel discussion at the Center for Automotive Research’s virtual Management Briefing Seminars.

CAR 2020 MBS.pngIn his effort to build U.S. manufacturing back up, Trump believes companies must be forced to invest here, says Leonard, a Bloomberg reporter. That belief runs so deep that the president once said he was “baffled” by the fact that the U.S. auto industry isn’t self-sufficient in terms of supply chain, she says.

Some trade issues affecting the automotive industry are ongoing, such as the intensifying U.S.-China trade dispute, and others are developing, including Trump’s revived threat to reimpose tariffs on imports of Canadian aluminum, says Jennifer Safavian, president and CEO of Autos Drive America, a Washington-based trade group representing international automakers in the U.S.

Trump’s threat is based on Section 232 of the Trade Expansion Act of 1962, which allows for the imposition of tariffs on goods deemed to be a threat to national security. Autos Drive America, echoing a position already voiced by many in the industry, doesn’t consider either autos or auto components a security threat, Safavian says, adding the dispute could wind up in the courts but probably not before the November election.Kristin Dziczek_CAR.jpg

Leonard says the administration considers tariffs on Canadian aluminum a separate issue from the USMCA, which adjusts tariffs based on so-called rules of origin specifying the percentage of autos and auto parts that must be produced in any of the three countries. The USMCA’s rules of origin and wage standards could be adopted in new trade deals with other countries or regions, she says.

The Trump Admin. has given companies a 12-month transition period to comply with USMCA rules because of disruptions to the business environment caused by the COVID-19 pandemic, Safavian says.

Kristin Dziczek (above), vice president-research at CAR, notes one of Trump’s first acts as president was to withdraw the U.S. from the Trans-Pacific Partnership, a trade agreement including several Asian countries as well as Canada, Mexico, Australia, New Zealand and Chile. One reason for adoption of the TPP was to counter China’s economic influence in the region.

Former Vice President Joe Biden, the presumptive Democratic nominee for president, could open the door to more multilateral trade agreements but, if elected, likely would initially focus on domestic issues, Safavian says. Leonard agrees, saying Biden has not offered many specifics on trade policy.

Leonard says other than the “steady decline” of the U.S.-China relationship, there has been relatively little recent movement on trade issues because of high turnover among Trump Admin. trade officials. But while neither she nor the other panelists offer to predict the outcome of the presidential election, Leonard says the next four years on the trade beat will be engaging.

 

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