Know your NAFTA: Automotive Manufacturing

Know your NAFTA: Automotive Manufacturing


[Music] when the US Canada and Mexico sit down to renegotiate NAFTA they’ll probably spend a lot of time talking about the auto industry cars and auto parts were among the first products to be freely traded across the US Canada border a 1965 deal known as the auto pact lifted most of the tariffs on parts and vehicles on both sides NAFTA allowed Mexico to hitch a ride and in recent years it’s been in the driver’s seat in 2015 Mexico overtook Canada to become number two in North American vehicle production over the past 15 years Canada has lost thousands of auto manufacturing and assembly jobs auto manufacturing is cheaper in Mexico but it’s not just NAFTA Mexico has been smarter about building up its auto exports through free trade agreements with other countries so while Canadian cars are mostly sent to the US Mexican ones end up in countries around the world making Mexico an attractive place to open auto factories and putting American Canadian or Mexican labels on cars doesn’t necessarily make sense because a lot of the manufacturing and assembly happens across all three countries minivan may roll off the assembly line in Canada but a quarter of the bits and pieces inside may originally be from the US the average car has some 30,000 parts so just imagine how many truckloads of airbags engines and seats are crossing the borders everyday parts can cross the border eight times before being added to the finished car untangling all the connections across the three countries may not even be possible Donald Trump has threatened to put a 35% tax on cars coming across the Mexican border but according to a michigan-based think-tank a move like that could end up costing the u.s. 30 thousand jobs reworking NAFTA might help make Canadian plants more competitive by raising wages in Mexico for example which is something Canada intends on pushing forth but ending it won’t bring those lost jobs back so for the sake of Canada’s auto industry let’s hope renegotiations stay on the road [Music]


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