ARIZONA – President Trump has, for now, backed off his threat to impose a 25% tariff on the Mexican auto industry. He says he will give Mexico up to a year to stop drug and migrant traffic from reaching U.S. borders.
If a tariff is imposed, it will likely hurt Arizona auto parts manufacturers. The fear is that if Trump places tariffs on cars coming from Mexico, the Mexican government will do the same to auto parts from Arizona going south.
Arizona’s exports of auto parts to Mexico grew faster in 2016-2017 than in any other area of the U.S., according to a report issued by the University Of Arizona Eller College Of Management in 2017.
Kenneth Smith Ramos is Mexico’s chief trade negotiator on the new trade agreement between the U.S., Mexico and Canada, called USMCA. He says the new trade agreement specifically prohibits auto tariffs, as did the original NAFTA agreement.
“The first 20 years of the NAFTA, it was about eliminating tariffs. Eliminating the taxes we pay on the things that we trade with one another,” stressed Smith Ramos.
Mr. Ramos added that a U.S. tariff on the Mexican Auto industry, would automatically void the new trade agreement that Canada, the U.S, and Mexico have spent the past two years negotiating.