US-Mexico Nafta talks drag on steep auto tariffs

WASHINGTON: Talks between the United States and Mexico over the future of the North American Free Trade Agreement were set to drag into this week, as auto industry officials said that new sticking points had emerged over President Donald Trump’s threat to impose steep automotive tariffs.
Auto industry officials familiar with the talks said the Trump administration wants the ability to impose national security tariffs on future Mexican production from new auto assembly and parts plants. These officials said US negotiators had essentially agreed that a new Nafta trade deal would exempt existing Mexican auto plants from any “Section 232” tariffs that Trump may impose.
But the US negotiators do not want to apply the same guarantees to new Mexican auto plants, the officials said, as the potential threat of 25 per cent tariffs would discourage new automotive investment in Mexico to serve the US market. At Trump’s direction, the Commerce Department in May launched a probe into whether imports of cars, trucks and auto parts pose a national security risk, invoking the same 1962 trade law used to justify broad tariffs on steel and aluminium — including those imposed on Canada and Mexico. Administration officials and congressional aides have said the car tariff probe, like the metals tariffs, in part is aimed at winning concessions during ongoing Nafta renegotiation talks. — Reuters