USMCA will lead automakers to choose US: Former Ford CEO
After factoring in logistics costs, USMCA will lead to automakers to build cars in the U.S.
The U.S.-Mexico-Canada Agreement (USMCA) could lead to automakers deciding to move production to the United States.
Auto manufacturers are going to look at USMCA’s new rules of origin requirements and decide that, after factoring in logistics costs, it will make sense to build their cars in the United States, former Ford CEO Mark Fields told FOX Business’ Maria Bartiromo.
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Under the USMCA’s rules of origin, 75 percent of auto content must be produced in North America for the finished car to be considered a North American product and therefore be subject to agreement’s tariff exemptions. It further required 40 to 45 percent of the finished product to be made by workers earning at least $16 per hour.
United Auto Workers assemblyman installs the front doors on a 2018 Ford F-150 truck being at the Ford Rouge assembly plant in Dearborn, Mich. (AP Photo/Carlos Osorio, File)
Current NAFTA rules stipulate that only 50 percent of a car’s value is required to be produced in North America to be subject to the agreement’s free trade protections.
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The most important thing, however, is that approval of the USMCA brings certainty, according to Fields.
“When businesses have certainty, they understand what the playing field is and they make investment decisions,” he said.
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In 2018, total trade with Canada was valued at an estimated $714.1 billion while total trade with Mexico had an estimated value of $671 billion, according to the U.S. Trade Representative’s office.
“It’s less important what the modernization of [NAFTA] does. It’s more what it prevents, which is just a total collapse of the trading pattern in North America,” Field concluded.