Automakers warn new USMCA trade deal will add to costs

Lobbyists say rules will induce ‘unnecessary complexity,’ disrupt supply chain

Stricter car-content rules in a new U.S. trade deal with Canada and Mexico will add to costs for automakers and their suppliers, industry representatives warned at a hearing on the economic consequences of the agreement. Industry lobbyists said complying with the complex new rules in the U.S.-Mexico-Canada Agreement, the successor to NAFTA, will be a challenging task that could disrupt supply chains and eliminate jobs. One official at the public hearing, though, acknowledged the new deal may lure production back to the U.S. over the long term, as U.S. President Donald Trump wants. “It is clear that the USMCA auto-origin rules will introduce unnecessary complexity, require costly changes to supply chains and potentially redundant investments,” John Bozzella, president of the Association of Global Automakers, said Thursday at the International Trade Commission. His organization represents companies including Toyota Motor Corp. and Hyundai Motor Co.

The U.S., Mexico and Canada reached a tentative deal at the end of September to replace the North American Free Trade Agreement, which Trump has called a “disaster.” The new pact is likely to be signed by the end of this month, but still has to be ratified by lawmakers of the three countries. The ITC must submit an economic-impact analysis to American lawmakers as part of the process for the new deal to take force in the U.S. On Wednesday, a senior House Democrat said the Trump administration needs to make changes before securing Democratic support for the new accord. There needs “to be not only changes in the legislation but more enforcement” if the Trump administration wants votes from Democrats, said New Jersey Representative Bill Pascrell, who is considered a leading candidate to chair the Ways and Means Trade subcommittee.