Trade Panel Says New NAFTA Will Hurt Sales

The Trump administration’s proposed successor to NAFTA will generate more than 28,000 auto-related jobs but cut annual car sales in the U.S. by 140,000 units, according to the U.S. International Trade Commission.

The ITC’s 375-page assessment predicts an overall “moderate” benefit to the American economy the improves gross domestic product by 0.35% ($68.2 billion). Employment would grow by 0.12%, or 176,000 jobs, about 80% of them outside the auto industry.

The commission predicts the new trade pact would increase production of American made auto parts but slightly reduce vehicle production in the U.S. It adds that the measure would raise vehicle prices by less than 2% for cars and 0.4% for trucks.

The commission’s analysis contrast with shorter and more bullish appraisal issued a few hours earlier by the White House.

The Office of the U.S. Trade Representative said it believes the new trade pact would create 76,000 jobs within the auto industry, attract $34 billion in manufacturing investment and hike the annual purchase of American made auto parts by $23 billion. The USTR evaluation did not mention retail car pricing.

The proposed U.S.-Mexico-Canada Agreement would raise the local content requirement for vehicles that enjoy no tariffs among the three countries to 75% from the current 62.5%. The pact also would require that at least 40% of the value of a vehicle made in the bloc be produced by workers who earn at least $16 an hour.

The ITC assessment notes that much of the benefit of the new agreement would result from it eliminating uncertainty about trade rules among the countries created by the decision and protracted effort to update the 25-year-old North American Free Trade Agreement.