Automotive Policy & Government

Study Suggests NAFTA Exit, Border Tax Would Raise U.S. Carmakers’ Costs

Source: Reuters

A U.S. exit from NAFTA or implementation of a border tax would result in many billions of dollars in additional costs for automakers and their suppliers and add hundreds of dollars to each car’s production costs, according to a study released on Wednesday.

“Vitality in the motor vehicle sector hinges on a globally integrated supply chain,” said Xavier Mosquet, a Detroit-based senior partner at Boston Consulting Group (BCG) and the study’s lead author. “By introducing new tariffs, a border tax and a retreat from NAFTA would greatly impede the industry’s relatively smooth and cost-effective flow of goods across borders in North America and around the world.”

Republican U.S. President Donald Trump has threatened to exit the North American Free Trade Agreement if it is not renegotiated in favor of the United States. Talks with Mexico and Canada on revisions to the treaty, which came into effect in 1994, are due to start in mid-August.

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