Trump's push for American-made could disrupt NAFTA supply chains, hike consumer prices

[Machiavelli]

Don Lee
Los Angeles Times
February 28, 2017

Shopping for a new set of wheels at a Chevy dealership recently, Patrick Spradlin had a few priorities: a good commuter car, room for his family of five, low maintenance costs and no more than $20,000.

About the last thing on his mind was where such a vehicle and each of its components — whether engine, car seats or spark plugs — were made. “That’s not a make-or-break issue,” said the 38-year-old systems engineer from Whaleyville, Md.

But such details about the origin of car parts and hundreds of other products may soon take on greater importance under the Trump administration, potentially translating into significant costs for consumers like Spradlin.

The issue, known in trade jargon as rules of origin, figures to be a major bone of contention as President Trump undertakes his promise to radically overhaul the North American Free Trade Agreement.

The 23-year-old pact is mind-numbingly complicated in its details. But what it boils down to is a system that allows the U.S., Canada and Mexico to trade hundreds of billions of dollars of goods with each other without having to pay duties.

On motor vehicles, there is a provision allowing duty-free imports and exports so long as at least 62.5% of the value of a vehicle originates in one or more of the three nations. Trump’s trade team is looking to raise that percentage significantly, on the theory that it will boost domestic production and jobs by preventing manufacturers from bringing in more components from Asia and other countries outside North America.

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[Weird Tolkienish Figure]

I'm still unclear on how seriously Trump takes economic nationalism. He doesn't seem to be moving heavily on any of it. My guess is people told him why it was a terrible idea and he'll only give the idea lip service for the next 4 years?


Obama similarly backed off the "Green economy" stuff, somewhat, after a few months. Hence he was talking up fracking after a while.