President Donald Trump could sign an executive order withdrawing the United States from the North American Free Trade Agreement in a move that could have widespread effects on the auto industry.
On Wednesday, a senior Trump administration official revealed that The White House is pondering drafting the order, which could be enacted by Trump if he is unable to win better terms for the U.S. in its trade pact with Canada and the United States.
News of the order sent stocks falling in the U.S. and Canada as many investors started to think that Trump may actually enact some of the actions he promised while running for the oval office.
According to assistant chief economist at Royal Bank of Canada Paul Ferley, “”It is a clear indication that they (in the White House) are wanting changes but we will have to see what emerges.”
If the U.S. does withdraw from NAFTA, the move is expected to impact the motoring industry in a number of ways. Perhaps most significantly, vehicles manufactured in Canada and Mexico which are imported into the United States, may be subject to significantly higher taxes (up to 35 per cent), inevitably increasing the prices of these vehicles for U.S. consumers, as reported by Autonews.
According to the Center for Automotive Research, withdrawing from NAFTA could also reduce car sales in the U.S. by about 450,000.
Trump’s stated goal of potentially withdrawing, is to bring manufacturing jobs back to the United States.
Update: Since this story was published, Trump has confirmed he is in favor of renegotiating NAFTA and not withdrawing.
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