The outlook for auto sector imports and exports remains uncertain as the industry sorts out the rules of the new North American trade deal, analyzes looming tariff threats and copes with disruption from the coronavirus pandemic, industry experts said Tuesday during a virtual version of the annual CAR Management Briefing Seminars.
Automakers are working closely with the Trump administration to comply with the United States-Mexico-Canada Agreement, but the COVID-19 pandemic has introduced additional timing challenges. The industry was just starting to ramp up production when the deal entered into force July 1.
"The administration has provided us with a 12-month transition period in order for us to fully comply with the new rules of origin, which are significantly different for autos," said Jennifer Safavian, CEO of Autos Drive America, a trade association representing major international automakers. The group, formerly known as Here For America, rebranded in July.
Some automakers are now seeking alternative staging plans through the Office of the U.S. Trade Representative. The proposals would give manufacturers two additional years to meet the regional value and labor value content thresholds of the new pact, extending its phase-in from the three years to five.
Automakers have until Aug. 31 to submit final plans.
But the process requires the tough task of gathering information from their suppliers during a pandemic, said Nicole Bivens Collinson, who leads the international trade and government relations practice for consultancy Sandler, Travis & Rosenberg.
"One of my clients has reached out to all of its suppliers asking for information, certifications, verifications, information on the non-originating value of materials," Collinson said. "Only 30 percent of them have returned information."
Recent threats by President Donald Trump to reimpose Section 232 tariffs on Canadian aluminum have created new uncertainty for automakers and their supply chains, the speakers said.
The threat of tariffs on automobiles and auto parts, as well as the ongoing trade war with China and tit-for-tat retaliation, have caused "a lot of collateral damage," Safavian said.
"We oppose these tariffs, as well as all tariffs, as they are just an additional tax that are placed on goods," she said. "Our goal really is to keep the U.S. as competitive a platform as possible, and tariffs really work against us in that regard."