NAFTA Negotiations Stall, Trump Delays Steel Tariffs

Negotiations for the North American Free Trade Agreement have stalled after the U.S. proposed new rules on the origin of components used in cars and pickup trucks sold tariff-free.

The break in talks brought the countries to the May 1 deadline in which President Trump said he would impose steel and aluminum tariffs on Canada and Mexico if the countries could not reach agreement on NAFTA.

The administration said Monday, a day before the tariffs were scheduled to take effect, it would delay imposing them on Canada, Mexico, and the European Union for another 30 days.

The U.S. NAFTA negotiating team presented a proposal last week requiring 40 percent of the parts used in light vehicles and 45 percent of parts used in pickup trucks to originate in high-wage countries.

The proposal required 75 percent of all components in a vehicle be North American-made to qualify for tariff-free importation, up from the current level of 62.5 percent. The 75 percent requirement includes a list of core parts such as engines, transmission, chassis, suspension, and batteries for electric cars.

Seventy percent of aluminum and steel used in vehicles also would be required to be from North America under the proposed rules.

Talks resume on May 7.

Sources: New York Times, Bloomberg, Wall Street Journal