Detroit automakers fear North American trade deal revamp could cost them billions
U.S. auto executives worry floated proposals could jack up costs even further
Detroit’s automakers plan to argue to the Trump administration that its proposals for a revised North American trade deal could cost the companies billions of dollars and hurt their competitiveness with foreign rivals.
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proposals → fear → rivals
U.S. car companies are still struggling to absorb the bevy of tariffs the administration implemented last year, including levies on steel and aluminum, car parts and vehicles shipped in from Mexico and Canada, and say rivals from Japan, South Korea and Europe face lower tariff burdens.
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rivals → struggle → burdens
Now, U.S. auto executives worry that U.S. proposals floated ahead of talks scheduled with Mexican trade officials next month could jack up costs even further.
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proposals → worry → costs
One of the most contentious points for automakers is Washington's demand that vehicles contain at least 50 per cent U.S.-made content to qualify for lower tariffs, as Reuters reported in May.
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Reuters → contain → May
That requirement, as well as a proposal to increase overall North American vehicle content from the current 75 per cent level, would add at least $2 billion US in annual costs for each Detroit automaker, according to estimates at two automakers.
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requirement → increase → automakers
Those expenses would come atop costs the automakers have already been incurring from the various levies in place since last year.
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automakers → come → year
The U.S. Trade Representative's office did not respond to a request for comment.
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office → respond → comment
Administration officials have said their tariff moves have been aimed at spurring more U.S. factory investment and jobs.
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moves → say → investment
General Motors expects gross expenses related to tariffs to cost it $2.5 billion US to $3.5 billion US this year, potentially representing more than 20 per cent of its operating profit.
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expenses → expect → profit
Ford Motor has pegged its net tariff hit at about $1 billion US this year.
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Motor → peg → US
Ford's latest onshoring
In an apparent signal to the White House of its commitment to make more cars domestically, Ford said on Wednesday it would move production of Lincoln models for the U.S. market to American factories from China, citing the Trump administration’s tariffs as a driving factor.
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it → make → factor
Ford CEO Jim Farley told Reuters the company might have been unprepared early on for the administration’s commitment to increasing U.S. auto production.
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company → tell → production
But Ford – which already builds a larger percentage of its U.S.-sold vehicles domestically than its Detroit rivals – got the message, he said.
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he → build → message
“It dawned on us very quickly, ‘Hey, look, we need to make some changes here,’” he said.
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he → dawn → changes
U.S. Commerce Secretary Howard Lutnick, in a joint interview, said he is hopeful more automakers will follow the lead of Ford and GM by moving factory work to the U.S.
“We worked together to get it right,” Lutnick added.
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Lutnick → say → U.S.
U.S. and Mexican officials are planning a fourth round of trade talks next month.
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officials → plan → talks
Canadian trade officials have been meeting with their U.S. counterparts this week in an effort to avert another round of tariffs on Canada set to take effect next week.
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officials → meet → effect
Asian automakers' advantages rankle
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advantages → rankle → ?
The American Automotive Policy Council, which represents Ford, GM and Jeep-maker Stellantis, referred Reuters to a June 30 statement saying that U.S. automakers are at a disadvantage to Japanese, South Korean and European automakers that export into the U.S. and face a flat 15 per cent tariff.
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that → represent → tariff
GM CEO Mary Barra said on a July earnings call that the company is focused on “making sure that the U.S. automakers are going to be able to compete and win when we look at what the tariff rates are for Europeans, the Japanese and the Koreans.”
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rates → say → Europeans
One U.S. auto executive said Trump more quickly forged deals with Korea and Japan because those governments were able to advocate on behalf of their automakers as part of broader trade agreements focused on national security, whereas the U.S. car companies didn’t have the same leverage.
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companies → say → leverage
“We don’t have a president or a prime minister who can call up Trump on our behalf,” the executive said.
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executive → have → behalf
Jennifer Safavian, president of Autos Drive America, a trade group for foreign automakers in the U.S. including Toyota and Hyundai, said the U.S.-Mexico-Canada trade talks are critical for all automakers.
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talks → include → automakers
"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," Safavian said in a statement.
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Safavian → make → statement
U.S. automakers currently face a duty of about 25 per cent on imports from Mexico and Canada, but vehicles with heavier amounts of U.S.-made content get lower tariff bills.
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vehicles → face → bills
GM told Reuters that vehicles that have significant U.S. and North American content “should receive better treatment than vehicles that do not,” and added that the automaker is encouraged by the administration’s progress on negotiations.
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automaker → tell → negotiations
Stellantis said it is encouraged by the talks and is working with the three governments "to ensure that we can build and sell affordable vehicles across the region."
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we → say → region
The Aporia
