Revised North American Trade Deal Threatens Detroit Automakers

Detroit’s major automakers plan to argue to the Trump administration that the latest proposals for a revised North American trade agreement could add billions of dollars to their expenses and erode competitiveness. The administration’s draft would require vehicles to contain at least 50 % U.S.-made content to qualify for lower tariffs and would raise the overall North American-vehicle-content threshold from the current 75 %. According to estimates from General Motors and Ford, the new rules would impose at least $2 billion in annual costs for each Detroit automaker.

Reuters

• General Motors projects tariff-related expenses of $2.5 billion to $3.5 billion this year, a figure that could exceed 20 % of its operating profit.

Reuters

• Ford has pegged its net tariff hit at about $1 billion for the year and announced the relocation of Lincoln production from China to U.S. factories, citing the administration’s tariff policy as a driver.

Reuters

• Current duties on imports from Mexico and Canada sit at approximately 25 %, while vehicles with higher U.S. content receive reduced tariff bills.

Reuters

U.S. Commerce Secretary Howard Lutnick expressed optimism that more manufacturers will follow Ford and GM in shifting production to the United States, noting that “we worked together to get it right.” Mary Barra, CEO of General Motors, told a July earnings call that the company is focused on ensuring U.S. automakers can “compete and win” against Japanese, South Korean and European rivals facing a flat 15 % tariff. The American Automotive Policy Council, representing Ford, GM and Stellantis, reiterated a June 30 statement that U.S. firms are disadvantaged because foreign competitors benefit from lower tariff burdens.

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• “We worked together to get it right,” — Howard Lutnick, commerce secretary

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• “Our American and North American-made vehicles use significant amounts of U.S. content and international automakers are also being harmed by the current trade environment with Mexico and Canada,” — Jennifer Safavian, the executive

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U.S. and Mexican officials are preparing a fourth round of trade talks slated for next month, while Canadian officials meet with their U.S. counterparts this week to avert a new set of tariffs on Canada scheduled to take effect the following week. The outcome of these negotiations will determine whether the proposed content requirements and tariff adjustments become binding policy.

Reuters