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sdholloway56
Senior Advisor

NAFTA 2.0

All Nancee’s fault I guess, but automotive was a huge part of it.

They thought they would force higher US content by raising the amount required where wages were greater than $16/hr.

What the US andJapanese firms that already have their supply lines built across the border are doing is raising the wage in MX and diverting their capital spending to robotics there.

At least most of that spending will be here.

Still something ag had to have, as before. But let’s stand in a circle with our white working brethren and sing Solidarity Forever.

2 Replies
sdholloway56
Senior Advisor

Re: NAFTA 2.0

Would also slow automation here, since capital will flow to the highest ROI.

Still an excellent example of unintended consequences.

BA Deere
Honored Advisor

Re: NAFTA 2.0

The USMCA is a much better agreement because one example it requires $16/hour jobs in Mexico ..which keeps undocumented Democrat voters in Mexico and oh yeah helps the people of Mexico.

https://www.npr.org/2018/10/17/657806248/will-nafta-2-0-really-boost-mexican-wages  

 

snippet:

NAFTA is no more. The North American Free Trade Agreement has a new name — the United States-Mexico-Canada Agreement, or USMCA — and its rules have been updated and revamped.

For Mexico, there's one rule in particular that gives workers hope higher wages are coming.

It says that 40 percent of a car must be made in a plant where workers make at least $16 an hour in order to avoid U.S. import tariffs. That would mean a fivefold boost to the average Mexican autoworker's wage of $3.14 an hour.

But while that looks good on paper, some experts are skeptical that it will happen anytime soon.

Mexican economist Luis de la Calle says carmakers in North America already largely conform to the 40 percent rule. The companies that don't can opt to pay a 2.5 percent tariff to export the car to the U.S.

"My bet is that, in the short term, some will just choose to pay the 2.5 percent. For the others we will have to see what happens," de la Calle says.