Automakers Say Trump's Anti-NAFTA Push Could Upend Their Industry As the administration seeks to redo the North American Free Trade Agreement, the industry is watching the talks closely. Automakers say changes could drive up costs, making them less competitive.
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Automakers Say Trump's Anti-NAFTA Push Could Upend Their Industry

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Automakers Say Trump's Anti-NAFTA Push Could Upend Their Industry

Automakers Say Trump's Anti-NAFTA Push Could Upend Their Industry

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U.S., Mexican and Canadian trade officials are back at it. They are renegotiating the North American Free Trade Agreement, or NAFTA. It's their seventh round of talks in the past six months. Now, progress has been made on small technical details. But as NPR's Sonari Glinton reports, some of the big sticking points involve the auto industry and one key number.

SONARI GLINTON, BYLINE: When you think about NAFTA and the car industry, it's important to know that not all auto companies are the same. Let's start with Ford. Now, no matter how you look at it, Ford is not really a car company. Ford makes trucks. That's what it sells the most of and that's what it's best at. It's where the money comes from. And pickup trucks are where Ford gets most of its profits. Here's Joe Hinrichs. He's in charge of Ford's North and South American operations.

JOE HINRICHS: You know, Ford - we make over 80 percent of our production. Our sales in the U.S. are already built in the U.S., so we make more of a higher percentage of our vehicle production in the U.S. than anybody else.

GLINTON: The Trump administration wants to change how a vehicle qualifies under NAFTA, meaning it's not subject to taxes and tariffs. Right now, sixty-two point percent of a vehicle has to be made in Mexico, the U.S. and/or Canada. Now, here's the number that's causing the anxiety - 85 percent. So 85 percent of the content would have to come from NAFTA countries with half the content coming from the U.S. So Ford being the most American car company for these purposes has the least to lose, which is why Joe Hinrichs sounds almost upbeat.

HINRICHS: So we're in a good position to make all our trucks here. We're bringing the Ranger and Bronco here. We're adding capacity at Flat Rock to build the automic (ph) vehicle here. So we're actually in a relatively good position as far as U.S. content. And we're looking forward to modernization of NAFTA that works for everybody.

GLINTON: If we look at Fiat Chrysler, it's a bit different from Ford. Fiat Chrysler is both an American and a European company.

SERGIO MARCHIONNE: I sincerely hope that some of the demands that are being pushed by the U.S. administration are going to be retuned.

GLINTON: That's Sergio Marchionne, Fiat Chrysler's CEO. He says you don't need to tear up NAFTA to bring more jobs to the U.S. He points to his and other company's investments.

MARCHIONNE: I don't think we need to go to the 85 number to try and address what President Trump's concerns are. I'm hopeful. And I think we'll see a more rational number going forward.

GLINTON: Now, take the case of Toyota, a company that makes a lot of vehicles in the U.S. and sells many of them overseas.

JIM LENTZ: We export 136,000 vehicles to almost 40 countries around the world. We can only do that and be competitive with NAFTA.

GLINTON: Jim Lentz is Toyota's North American CEO.

LENTZ: And I'll give you the perfect example. We export Highlanders to China. If losing NAFTA raises my cost, Russia's going to say, do I want to buy a Highlander coming out of the U.S.? Or maybe it's less expensive to buy it out of another plant coming out of China.

GLINTON: Monica de Bolle is an economist with the Peterson Institute for International Economics, a D.C. think tank that's pro-trade. She says that 85 percent number for content would upend the entire industry.

MONICA DE BOLLE: This would basically force carmakers to rethink their entire production structure.

GLINTON: De Bolle says even if the administration got everything it wanted, change would take time.

DE BOLLE: The jobs and the, you know, bringing back the factories, bringing back all the stuff that the administration says it wants to bring back - that wouldn't happen within a timeframe of one, two, three years. It would take much, much longer than that.

GLINTON: De Bolle says by the time those low-wage jobs come back from Mexico, they'll likely be done by robots. Sonari Glinton, NPR News.

(SOUNDBITE OF BOONIE MAYFIELD'S "THE ROADS TO RHODES")

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