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Executive Summary

The new North American free trade agreement will have a substantial impact on vehicle manufacturers, their parts suppliers and their customers. The impact on vehicle companies will vary depending in part on where such key components as engines and transmissions are sourced for their North American assembly plants.

Changes in the rules of origin that require higher amounts of North American-generated content will increase production costs. These will be passed on to consumers in the three countries or absorbed by the car companies, reducing the competitiveness and profitability of the North American auto industry, but supply chains that have been built up over almost a quarter-century of NAFTA will remain largely intact.

About the Author

Greg Keenan

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Mexico Institute

The Mexico Institute seeks to improve understanding, communication, and cooperation between Mexico and the United States by promoting original research, encouraging public discussion, and proposing policy options for enhancing the bilateral relationship. A binational Advisory Board, chaired by Luis Téllez and Earl Anthony Wayne, oversees the work of the Mexico Institute.   Read more