US and Mexico reach a trade deal, paving the way to replace NAFTA

[Ventanni]

Until more details emerge, you can't really say what this is going to do. The US has a rather large trade deficit with Mexico, and most of it is from the car industry. Trump's goal is to eliminate or reduce this trade deficit, which may require giving some sort of bone to Mexico in the process. But, we don't know the details, or what Mexico is supposedly agreeing to buy in return.

I really can't see this being a bad thing though if Mexico starts buying more stuff from the United States, but if there's one thing to learn about Trump, he declares victory a little bit too early rofl.

 

[dainthomas]

I'd love to see the aftermath of Trump just plain old pulling out of NAFTA.

Brexit 2: Electric Boogaloo

 

[mxnerd]

https://ustr.gov/about-us/policy-of...2018/august/modernizing-nafta-be-21st-century

UNITED STATES–MEXICO TRADE FACT SHEET: Modernizing NAFTA to be a 21st Century Trade Agreement

The United States and Mexico have reached a preliminary agreement in principle, subject to finalization and implementation, to update the 24-year-old NAFTA with modern provisions representing a 21st century, high-standard agreement. The updated agreement will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.

==

No deal signed yet. It's an update, not replacement!

Fake news from Trump!

 

[K1052]

Until more details emerge, you can't really say what this is going to do. The US has a rather large trade deficit with Mexico, and most of it is from the car industry. Trump's goal is to eliminate or reduce this trade deficit, which may require giving some sort of bone to Mexico in the process. But, we don't know the details, or what Mexico is supposedly agreeing to buy in return.

I really can't see this being a bad thing though if Mexico starts buying more stuff from the United States, but if there's one thing to learn about Trump, he declares victory a little bit too early rofl.

I don't think the auto provisions will reduce the trade deficit. Trump admin thinks that by raising NA content and wage requirements that parts production will move to the US. Consensus seems to be that automakers and suppliers won't move production and instead simply pass higher costs on to the consumer (because it will still be cheaper overall to make in Mexico) and actually possibly increase the deficit in the process as higher cost parts are imported.

The promise by Mexico to buy lots more US ag products looks like like the same promise the Chinese and Europeans made. Probably something he demanded but the EU and Mex have no way to actually accomplish that I'm aware of.

 

[fskimospy]

I wish people would get the idea out of their heads that trade deficits are inherently bad. They aren’t.

 

[K1052]

uh...the AMLO view:

 

[cytg111]

Is it a sure thing?
Like denuclearization of NK?
Best deals?

 

[blackangst1]

So far, this looks like a great improvement over the previous NAFTA deal-

• It requires 75 percent of an automobile's value to be manufactured in North America, up from 62.5 percent under NAFTA.
• It requires 40 percent to 45 percent of a car to be made by workers earning at least $16 an hour.
• No new tariffs would be imposed on agricultural goods traded between the U.S. and Mexico, according to reports.
  
  
  

 

[Jhhnn]

It requires 75 percent of an automobile's value to be manufactured in North America, up from 62.5 percent under NAFTA.

So what? Mexico is in N America. It doesn't change the relationship between us. If car makers have to produce more parts in N America that production will probably go to Mexico.

 

[fskimospy]

So far, this looks like a great improvement over the previous NAFTA deal-

• It requires 75 percent of an automobile's value to be manufactured in North America, up from 62.5 percent under NAFTA.
• It requires 40 percent to 45 percent of a car to be made by workers earning at least $16 an hour.
• No new tariffs would be imposed on agricultural goods traded between the U.S. and Mexico, according to reports.
  
  

Can you explain why you think these things are better? (Except for the third)

I mean this agreement is likely bullshit anyway but even if it isn’t what percentage of trade do you think it affects?

 

[ch33zw1z]

So what? Mexico is in N America. It doesn't change the relationship between us. If car makers have to produce more parts in N America that production will probably go to Mexico.

Yup, and now we're ok with a minimum wage requirement for cars only?

 

[fskimospy]

It’s hard to understand why any of these things are improvements. Why is a greater part of a car being assembled in North America inherently better?

Presumably people would think that requiring 100% to be built here would be bad so why is 75% better than 62%? Why is creating a weird international minimum wage a good idea?

 

[Jhhnn]

It requires 40 percent to 45 percent of a car to be made by workers earning at least $16 an hour

American auto workers are paid considerably more than that-

https://www.bls.gov/iag/tgs/iagauto.htm

I'm sure that applies to Canadian workers, as well. It may raise wages in Mexico by charging US consumers more for the end product. Hell- we don't know what those percentages are today. It might not change anything.

 

[Josephus312]

Why does it feel like this will pan out to be much like "NK is not a nuclear threat anymore".

Trump keeps talking and nothing is happening. IF this deal was actually worked out it would be a GREAT incentive for EU car manufacturers to move their factories to Mexico. No steel and aluminum tariffs and no tariffs on the finished product either.

 

[blackangst1]

So what? Mexico is in N America. It doesn't change the relationship between us. If car makers have to produce more parts in N America that production will probably go to Mexico.

Does Mexico pay $16/hour? Hint: thats a trick question

edit: Nope. They dont.

Remember. NAFTA was created not just for US gain, but for Mexico. Trump's plan increases that gain. Whats wrong with that?

 

[blackangst1]

It’s hard to understand why any of these things are improvements. Why is a greater part of a car being assembled in North America inherently better?

Presumably people would think that requiring 100% to be built here would be bad so why is 75% better than 62%? Why is creating a weird international minimum wage a good idea?

Because the rest of the world maybe is following the United States left's push last several years of a $15/hr minimum wage. Which it seems most people support.

Why is driving up wages for workers bad?

 

[blackangst1]

American auto workers are paid considerably more than that-

https://www.bls.gov/iag/tgs/iagauto.htm

I'm sure that applies to Canadian workers, as well. It may raise wages in Mexico by charging US consumers more for the end product. Hell- we don't know what those percentages are today. It might not change anything.

Mexican auto workers make nowhere near the US's minimum wage. Are you against raising wages for other countriy's workers?

 

[Engineer]

Mexican auto workers make nowhere near the US's minimum wage. Are you against raising wages for other countriy's workers?

Are we sure that Mexican auto workers are getting a raise? It states 40-45% making $16 or more per hour. Quite easy when you do 40-45% here and Canada. Then what?

What percent of cars are made today at $16 or higher per hour in North America? (honest question).

Is that saying that if a car is made in Mexico, that 40-45% of the items made for that car must be at $16 or higher per hour from that country's labor pool or does the 40-45% mean across North America (any source of labor)?

 

[fskimospy]

Because the rest of the world maybe is following the United States left's push last several years of a $15/hr minimum wage. Which it seems most people support.

Why is driving up wages for workers bad?

So to be clear you support an increased minimum wage for Mexican auto workers, paid for by taxes on American consumers? Why not just give Mexico foreign aid and not disrupt existing supply chains that were built at great expense? (Also surely you know that is not the purpose here)

The purpose of this is to prop up American car manufacturing by making Mexican car manufacturing more expensive. This is good if you are someone who engages in car manufacturing (very few) and bad if you’re someone who engages in car buying. (Basically everyone)

I would love to see an economic case for why this is good for America. I’m open to being convinced but I suspect if it even actually happens it’s just more wasteful protectionist bullshit.

 

[blackangst1]

Are we sure that Mexican auto workers are getting a raise? It states 40-45% making $16 or more per hour. Quite easy when you do 40-45% here and Canada. Then what?

What percent of cars are made today at $16 or higher per hour in North America? (honest question).

Im Mexico? Most. According to this and this article, the idea was get Mexico to pay their workers more.

Is that saying that if a car is made in Mexico, that 40-45% of the items made for that car must be at $16 or higher per hour from that country's labor pool or does the 40-45% mean across North America (any source of labor)?

Thats how I read it.

NAFTA originally was proposed to herlp all 3 countries. Trade in between the 3 certainly has increased, which is great, regional;ly. I believe this new deal is to part of a long term plan to get Mexico to pay their workers a fair wage, thus ultimately encouraging Mexicans to not want to cross the border illegally to find work.

Now, if what youre saying is true, that it wont have any effect on anything, then you have to agree the original NAFTA deal didnt either. Right? Because this simply raises the bar slightly on already in-effect deals.

 

[blackangst1]

So to be clear you support an increased minimum wage for Mexican auto workers, paid for by taxes on American consumers? Why not just give Mexico foreign aid and not disrupt existing supply chains that were built at great expense? (Also surely you know that is not the purpose here)

What? Citation?

The purpose of this is to prop up American car manufacturing by making Mexican car manufacturing more expensive. This is good if you are someone who engages in car manufacturing (very few) and bad if you’re someone who engages in car buying. (Basically everyone)

Did you feel the same way about NAFTA?

I would love to see an economic case for why this is good for America. I’m open to being convinced but I suspect if it even actually happens it’s just more wasteful protectionist bullshit.

I dont see how this improves anyone but Mexico.

And theres nothing wrong with a little protectionism.

edit: First you say you'd like to see how this benifits America, which tells me you think America should improve. Then make a rash comment about protectionism? /confused You cant be all America first and not be a little protectionist.

 

[fskimospy]

What? Citation?

That’s what tariffs are, taxes on your own citizens to make foreign goods more expensive.

This is something that I feel a lot of people don’t understand about trade protectionism. You’re the one paying the bill.

Edit: to be clear we are significantly increasing the labor costs of producing automobiles by doing this. That cost is going to be passed on at least in part to the people buying the cars. ie: you.

Did you feel the same way about NAFTA?

Huh? No, NAFTA is a very good thing. Any time we are lowering trade barriers that’s increasing efficiency. It’s a big plus.

I dont see how this improves anyone but Mexico.

This does not improve Mexico, this adds barriers to their auto manufacturing export. If you quintuple the wages companies must pay Mexican workers do you think investment in auto manufacturing in Mexico will go up or down?

And theres nothing wrong with a little protectionism.

edit: First you say you'd like to see how this benifits America, which tells me you think America should improve. Then make a rash comment about protectionism? /confused You cant be all America first and not be a little protectionist.

I didn’t say anything about America first, I said I don’t see how this benefits America. Trade is not zero sum, something the idiot in the White House apparently does not understand.

Protectionism is bad and at least at first glance this is a very dumb deal.

 

[blackangst1]

That’s what tariffs are, taxes on your own citizens to make foreign goods more expensive.

This is something that I feel a lot of people don’t understand about trade protectionism. You’re the one paying the bill.



Huh? No, NAFTA is a very good thing. Any time we are lowering trade barriers that’s increasing efficiency. It’s a big plus.



This does not improve Mexico, this adds barriers to their auto manufacturing export. If you quintuple the wages companies must pay Mexican workers do you think investment in auto manufacturing in Mexico will go up or down?



I didn’t say anything about America first, I said I don’t see how this benefits America. Trade is not zero sum, something the idiot in the White House apparently does not understand.

Protectionism is bad and at least at first glance this is a very dumb deal.

Well, I guess we'll agree to disagree. Theres alot of things I dont like about Trump, but Im not a totall 100% anti-Trumper.

 

[Jhhnn]

Mexican auto workers make nowhere near the US's minimum wage. Are you against raising wages for other countriy's workers?

I didn't say that at all. Please refrain from putting words in my mouth.

 

[fskimospy]

Well, I guess we'll agree to disagree. Theres alot of things I dont like about Trump, but Im not a totall 100% anti-Trumper.

Agree to disagree how? Can anyone articulate to me how this helps the average American?

Again, I can see how it helps you if your job is building cars. I fail to see how it helps the rest of us and it in fact hurts us because we foot the bill.