DETROIT (Jan. 17, 2017) — President-elect Donald Trump's vows to renegotiate the North American Free Trade Agreement (NAFTA) and pursue more protectionist trade policies likely would have a negative effect on the U.S. auto industry, a new study reveals.
NAFTA has been a net positive for the industry and for the U.S. economy as a whole, supporting high-wage jobs and making North America a more attractive place to do business, according to a study released this month by Ann Arbor, Mich.-based Center for Automotive Research (CAR).
Withdrawing from NAFTA and implementing a 35-percent tariff on imported vehicles and parts, as Mr. Trump repeatedly has pledged, would cause vehicle prices to spike, the U.S. market to shrink and at least 31,000 U.S. auto manufacturing jobs to be lost, according to the CAR study.
"Any move by the United States to withdraw from NAFTA or to otherwise restrict automotive vehicle, parts and components trade within North America will result in higher costs to producers, lower returns for investors, fewer choices for consumers and a less competitive U.S. automotive and supplier industry," the authors wrote in the report, funded by the Alliance of Automobile Manufacturers (AAM) trade group.
Mr. Trump, who will be sworn into office on Jan. 20, ran for president in part on a platform to renegotiate or withdraw from trade agreements such as NAFTA, which he has called a "disaster," and bring back American manufacturing jobs lost to globalization, productivity gains and technological advances.
The president-elect has not toned down his fiery trade rhetoric since his election victory, frequently singling out automakers on Twitter for selling Mexican-made vehicles in the U.S. and threatening to slap them with a 35-percent tariff.
In response, auto makers, including each of the Detroit 3, have announced plans to invest in U.S. plants, though they each insist Mr. Trump's repeated threats are not the primary motivation for those investments.