The Trump administration has softened a key NAFTA demand for more North American content in car manufacturing – a potential olive branch on arguably the biggest sticking point as the U.S. pushes to reach a stopgap deal this month, three people familiar with the talks told Bloomberg.
This story by Eric Martin and Josh Wingrove appeared in Automotive News Canada.
The U.S. proposal would distinguish between different NAFTA car parts by grouping them into five categories, some of which would have a lower requirement for North American content or none at all, said the people, who spoke on condition of anonymity because they’re not authorized to discuss the negotiations publicly.
While the U.S. had been pushing for 85 percent of a vehicle’s content to be sourced from the three NAFTA countries to be traded tariff-free, its latest proposal would apply that threshold to major components such as transmissions and engines but not to the simplest inputs like nuts and bolts, the people said.
Although it’s less arduous than the original demand, automakers would still be hard-pressed to hit the 85 percent threshold on critical parts, and no agreement has been reached. NAFTA currently requires a typical vehicle to have 62.5 percent North American content in order to benefit from tariff exemptions.
The new U.S. proposal comes as President Donald Trump – facing a mounting tariff spat with China – takes a sunnier approach to NAFTA talks and pushes to announce a deal in principle next week.