WASHINGTON -- U.S. automakers, analysts and the UAW said President Donald Trump's revised NAFTA deal could have positive implications for the U.S. auto industry, but details of the agreement still needed a closer look.
The U.S.-Mexico-Canada Agreement "will transform America back into a manufacturing powerhouse and allow us to reclaim a supply chain that was offshored to the world," Trump said in remarks from the White House Rose Garden on Monday.
NAFTA caused the U.S. auto industry to shed about a quarter of all jobs, which is why so many union members voted for him, he said. Experts say automation and other factors beyond trade also played a role in lower employment levels across the industry.
Under the deal previously hammered out with Mexico, light-duty vehicles will require 75 of their content to originate in North America to qualify for duty-free treatment when imported from Canada or Mexico. The agreement also requires greater use of domestic steel and other materials and that 40 to 45 percent of the content comes from regions with labor rates of at least $16 per hour.
The Trump administration's goal is to make it easier for automakers and suppliers to maintain or expand domestic plants by making it more expensive to produce outside the U.S.
"With this agreement we are closing all those terrible loopholes," which will lead to more high-quality jobs in the U.S., Trump said.
Foreign automakers that ship parts from their home base to plants in Mexico could face the greatest challenge complying with the rules, according to analysts.
Automakers had mixed initial reaction to news of the deal, but said they were reviewing details to understand its impact. The industry has been unified in opposition to Trump's threats of broad tariffs on automobiles, but less so on changes to NAFTA's auto rules.
Automakers representing foreign brands in the U.S. such as Honda and Kia expressed lukewarm support for the proposed deal, noting "that the cost and complexity of complying with the new auto rules will pose serious challenges for U.S. automakers."
They said they were reviewing the text of the agreement.
Domestic automakers had a more favorable take.
"Ford is very encouraged by today's announcement, and we applaud all three governments for working together to achieve free and fair trade in a strong regional agreement. We stand ready to be a collaborative partner to ensure this agreement is ratified in all three markets because it will support an integrated, globally competitive automotive business in North America," Joe Hinrichs, Ford's president of global operations, said in a statement.
The American Automotive Policy Council, which represents General Motors and Fiat Chrysler Automobiles in addition to Ford, called the deal "workable" for the industry.
Meanwhile, the Alliance of Automobile Manufacturers, whose members include foreign and domestic auto companies, said the retention of a trilateral deal with Mexico and Canada is "encouraging."
Automakers' top priority was to maintain a closely integrated production system that took advantage of efficiencies in each nation.
In some cases, meeting the content requirements could force automakers to offer stripped down models with less content or more content could become optional with higher markups, said Ivan Drury, senior manager of industry analysis at Edmunds.
Wait and see
UAW President Gary Jones, in a statement, said the "true test of a new NAFTA agreement" will ultimately be whether it means higher wages and benefits for UAW members and manufacturing workers.
"We think the idea and concept of the USMCA could have the potential to provide some needed relief for America's working families," the statement said.
"Numerous details still need to be reviewed and resolved before making a final judgment on this agreement. ... We need to be assured that Mexico is going to fix weak labor laws and enforce new worker protections. We do not know what the [U.S. trade representative] and Congress will do to make sure the words in the agreement are carried out. We need to review and resolve the details of the agreement when they are available to be sure that this agreement truly ends NAFTA's legacy of shuttered factories and low wages."
Michelle Krebs, executive analyst at Autotrader, said in a statement: "At more than 1,000 pages in length, we won't fully understand the overall impact of the trade agreement negotiated over the weekend without further study and until it is officially approved later this year. However, the fact that there is a directional agreement at all, one that has a long-term horizon of 16 years and will allow automakers and their suppliers to do long-range planning, is a plus."