Auto manufacturers are going to look at USMCA’s new rules of origin requirements and decide that, after factoring in logistics costs, it will make sense to build their cars in the United States, former Ford CEO Mark Fields told FOX Business’ Maria Bartiromo.
Under the USMCA’s rules of origin, 75 percent of auto content must be produced in North America for the finished car to be considered a North American product and therefore be subject to agreement’s tariff exemptions. It further required 40 to 45 percent of the finished product to be made by workers earning at least $16 per hour.
Current NAFTA rules stipulate that only 50 percent of a car’s value is required to be produced in North America to be subject to the agreement’s free trade protections.
The most important thing, however, is that approval of the USMCA brings certainty, according to Fields.
“When businesses have certainty, they understand what the playing field is and they make investment decisions,” he said.
“It’s less important what the modernization of [NAFTA] does. It’s more what it prevents, which is just a total collapse of the trading pattern in North America,” Field concluded.