House Members Urge Trump to Drop NAFTA Local-Content Demand

Dozens of U.S. House of Representatives members are urging the White House to abandon its demand to raise the North American Free Trade Agreement’s local content rule for cars.

NAFTA says cars built in North America can avoid tariffs when shipped between Canada, Mexico and the U.S. only if their local content is at least 62.5%. The Trump administration wants that proportion hiked to 85%, with half the total coming from the U.S.  Canada and Mexico have indicated they will reject those terms.

In a letter to the White House, a bipartisan group of more than 70 representatives warns that the proposed increase would hurt U.S. vehicle production, sales, exports and jobs. They say the outcome would be the same whether Canada and Mexico agree to the targets or opt to abandon NAFTA instead. Carmakers and suppliers have been making similar pleas to avoid actions that would make the North American auto industry less competitive globally.

A fifth round of trade talks began yesterday in Mexico City and is scheduled to run through Nov. 21. The three countries had hoped to finalize updates to the 24-year-old agreement by the end of December, but they now expect negotiations will continue into 2018.