Game of chicken: GM bets on Mexican-made pickup trucks

01/15/2018 Reuters

automobileSILAO, Mexico/DETROIT (Reuters) – General Motors Co’s (GM.N) assembly plant in Silao, a city in Mexico’s automotive heartland, cranked out more than 400,000 highly profitable, large pickup trucks last year, and is critical to the launch of a new generation of Chevrolet Silverado trucks later this year.

Now, GM’s Silao factory, and the profit it generates, are at risk.

If U.S. President Donald Trump follows up on threats to dump the North American Free Trade Agreement, pickup trucks built at Silao and shipped to the United States could be hit with a 25 percent tariff, known in the auto industry as the “chicken tax.”

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Nafta Trio to Gather in Davos as Negotiations Resume in Canada

01/15/2018 Bloomberg

flag pictureThe three ministers leading negotiations to revamp Nafta will get two chances for face-to-face talks this month, including one near the slopes of Davos.

U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland are due to attend the World Economic Forum in Switzerland, which begins on Jan. 23, the same day the sixth round of North American Free Trade Agreement talks get underway across the Atlantic in Montreal.

Freeland expects to raise the subject of Nafta informally on the sidelines of Davos, spokesman Alex Lawrence said in a statement. The three ministers are also tentatively scheduled to hold a trilateral meeting in Montreal on Jan. 28, he said. The ministers didn’t attend the last two negotiating sessions in Mexico and Washington, after attending previous rounds.

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Mexican president says ‘optimistic’ about NAFTA deal

01/11/2018 Reuters

A US cable claimed Televisa gave the Mexico State governor Enrique Peña Nieto wide coverageMEXICO CITY (Reuters) – Mexican President Enrique Pena Nieto said on Thursday he is optimistic that the United States, Mexico and Canada can successfully renegotiate the North American Free Trade Agreement (NAFTA) to the mutual benefit of the three countries.

Trump Reiterates Nafta Threat, Linking Talks to Mexico Wall

01/11/2018 Bloomberg

flag picturePresident Donald Trump reiterated his threat to withdraw the U.S. from Nafta while saying that gains from a new deal could be used to pay for a wall at the Mexican border.

A day after Canadian officials said they viewed the odds of withdrawal as rising, Trump repeated his threat to pull out of the North American Free Trade Agreement if it can’t be reworked in his favor, the Wall Street Journal reported Thursday, citing an interview with the president. However, Trump said he was willing to be “a little bit flexible” about the deal until after Mexico’s presidential election in July. He didn’t elaborate on what that means.

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Nafta’s Dead. Long Live Nafta. A Look at Most Likely Outcomes

01/11/2018 Bloomberg

nafta_logo1Markets shuddered on signs the U.S. may be preparing to withdraw from Nafta. But even if President Donald Trump serves notice of a pullout, the trade deal could survive.

Under the accord, the U.S., Canada or Mexico can withdraw after giving six-months’ notice. Scant progress has been made on the thorniest issues ahead of the sixth round this month in Montreal, fueling speculation Trump will follow through on his threat to walk away.

Investors are looking to any clues. Canada’s dollar and Mexico’s peso dropped and Mexican stocks retreated following reports on Wednesday that Canada sees an increasing chance the U.S. will exit Nafta. The White House later said its policy hasn’t changed.

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Mexico will leave NAFTA talks if Trump triggers process to withdraw

01/10/2018 Reuters

NAFTAMEXICO CITY (Reuters) – Mexico will leave the NAFTA negotiating table if U.S. President Donald Trump decides to trigger a 6-month process to withdraw from the trade pact, three Mexican sources with knowledge of the talks told Reuters on Wednesday.

Reuters reported earlier in the day that Canada was increasingly convinced that Trump would soon announce the United States intends to pull out of the North American Free Trade Agreement (NAFTA), sending the Canadian and Mexican currencies lower and hurting stocks across the continent.

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Mexico in 2018

01/9/2018 The Expert Take

expert I (2)By Luis Rubio

The presidential election of 2018 will be the first to be held in Mexico without an international anchor that guarantees the continuity of economic policy since the era of competitive, democratic elections was inaugurated back in the 90s. That anchor has proven to be key to attracting investment and conferring certainty to the population as well as to investors and hence, to the gradual evolution of the country. This does not necessarily mean that there will be radical changes in the government’s strategy. However, for the first time since NAFTA came into effect in 1994, the decision of how to conduct the country’s destiny will no longer be constrained by international commitments and, thus, whoever wins the upcoming election will have unbound power in this regard. The whole political point of NAFTA -an established framework to work under any electoral scenario- will no longer be there. Mexico is living a completely new political reality.

The rhetorical attacks on trade matters and, particularly, NAFTA that President Trump launched since his campaign in 2016 and his insistence on the possibility of cancelling it, has had a decisive impact on Mexican politics. By eliminating the “untouchable” character of the deal within Mexico, the certainty that emanated from it has also evaporated. Even if NAFTA were to continue (in my opinion, the most likely scenario), the damage already inflicted is enormous- as the high domestic political costs that a withdrawal at Mexico’s behest would have entailed no longer exist.

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