Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

NAFTA? We Hafta

September 21, 2018
By Brad Strong, 2018 AIADA Chairman
Contentious NAFTA negotiations are once again making headlines. U.S. and Mexican official have signed a tentative deal, meaning the official clock is ticking on a final NAFTA agreement. However, at this point Canada has not agreed to anything — a major roadblock to renegotiating this vital trilateral agreement.  
The latest language in the agreement hasn’t been released, but we’re hearing reports of how our industry might be affected. For now, we can’t know with certainty what impact a NAFTA agreement might have on the White House’s plans to apply 232 National Security tariffs to imported vehicles. We DO know that without NAFTA, economists, mayors, and business leaders all agree that American economic growth and jobs will sustain a serious blow, and American businesses will be put at a global disadvantage.
So yes, when it comes to NAFTA, we HAFTA cut a deal.
Dealers understand that our industry hinges on a complicated and entrenched supply chain. Plants and suppliers are identified and developed over decades; there are no quick changes in this industry. And pennies matter. With the cost of cars and their technology and safety features on the rise, consumers are hard pressed to make the financials work. Margins are thinner than ever, and dealers rely upon fairly priced autos and auto parts to stay solvent.
Without a trilateral NAFTA, our carefully balanced — sometimes precariously — industry will be put in jeopardy.
Here’s what has happened to the auto industry in the U.S. since NAFTA was signed in 1993:
• International nameplate automakers have doubled their number of direct employees in the U.S. to 130,000 Americans and tripled production.
• In 2016, automakers manufactured 12.2 million vehicles in the U.S., which is 1 million more than it did the year before NAFTA took effect.
• Worldwide exports of U.S.-built vehicles have more than doubled, and their value has more than tripled to $54 billion in 2016.
• International nameplate brands have increased their exports from the U.S. by five times since 1993, from 121,300 vehicles to 925,000 cars and trucks in 2016.
Does NAFTA need to be updated to reflect technological developments and improved labor standards over the past 20-plus years? Absolutely. Is it responsible for American manufacturing job losses and are we better off without it? Not at all.
According to MarketWatch, "Today, U.S. factories produce twice as much stuff as they did in 1984, but with one-third fewer workers." Pulling out of NAFTA won’t change the facts that American factories and plants have figured out ways to be more efficient. It will just make goods more expensive for the American consumer.
NAFTA is crucial to dealers, as is establishing a NAFTA that works for all manufacturers and keeps cars affordable. That’s why the American International Automobile Dealers Association is working with the Here For America coalition of concerned manufactures and parts suppliers.
But whatever you do, don’t be complacent. And don’t think your business won’t be negatively impacted by a NAFTA collapse. For dealers, NAFTA isn’t nice to have — it’s a must-have — and our elected officials need to hear that message from us.