Big picture move by President Trump today that has massive, and generally misinterpreted, ramifications for any trade deal with China, EU and most importantly NAFTA.
China is using U.S. nuclear negotiations with North Korea as leverage for more beneficial trade outcomes; the communist regime is in full manipulative dragon-mode. President Trump can see through the economic play and is dropping the Panda outreach. Eagle-one now hits back at Chairman Xi for deploying such dangerous tactics.
If you have been following trade nuance, the Automobile Sector is one of the biggest points of contention within varying trade negotiations. In the NAFTA discussion the auto-sector, via rules of origin, runs at the heart of NAFTA’s fatal flaw.
The fatal flaw is the use of Asian, mostly Chinese, auto components within auto manufacturing. Mexico and Canada arguing to allow more Chinese auto parts in North American manufacturing; and President Trump demanding more North American parts for North American auto manufacturing.
Many U.S. Auto manufacturers have moved to Mexico to exploit the NAFTA loophole (fatal flaw). Vehicles assembled in Mexico use cheaper Chinese parts and are shipped into the U.S. without any tariff under NAFTA rules.
It didn’t take long before EU auto-manufacturers, mostly German, to begin taking the same approach. Albeit to a lesser extent, German auto companies also invested in building vehicles in Mexico/Canada for tariff-free transfer into the U.S. This works out great for Canada and Mexico auto-workers, but not for the U.S.
In essence, the auto-sector is representative of much of the manufacturing exploitation by multinational corporations beyond vehicle production. China has supported this approach because they produce the components for multiple sectors (furniture, appliances etc).
