On January 10, 2019, LevaData, a supply chain AI company, released the results of its 2018 Automotive Survey based on responses from one hundred US-based auto executives. All of the individuals surveyed are senior executives of car manufacturers, car parts manufacturers or are in leadership positions in related industries.

The study was designed to gather feedback on the impact of NAFTA2 or as it has been renamed, the USMCA (US Mexico Canada Agreement), on the North American automotive industry. This industry is of major importance to the economies of three countries that are signatories to this agreement, and specifically to several U.S states (i.e. Michigan, Ohio, Kentucky, Tennessee) and the province of Ontario in Canada.

It should be pointed out that the USMCA has not been approved by the U.S. Congress. Based on the battle over President Trump’s border wall, this may suggest that some sections of the Agreement may be revised before it takes effect. Assuming that the essential structure of the agreement remains in place, here are some insights on how it will shape the industry in the coming years.

Impact of USMCA on North American Vehicle Production

These are distressing times for Canadians. Despite numerous meetings between the Canadian and U.S. (and Mexican) delegations over the past year, NAFTA negotiations reached another impasse on Friday, August 31. It is not surprising.

The Americans have negotiated in bad faith. Canada was excluded from the recent negotiations between the U.S. and Mexico. Rather than just negotiate the exchange of auto parts and minimum salaries for auto workers, the two parties reached an agreement on a much more extensive range of issues. Clearly the Americans sought to and succeeded in muscling the Mexicans into agreeing to a 2-way pact with them. The Mexicans were also not forthcoming in advising their Canadian counterparts of their intention to reach a multi-faceted two-party agreement with the Americans.

President Trump is threatening to apply a 25 percent tariff on auto parts manufactured in Canada if he doesn’t receive concessions on access to Canada’s dairy market, on a dispute settlement mechanism and an increase in the level of duty-free purchases. According to a John Holmes, a Queen’s University professor emeritus and research fellow at the Automotive Policy Research Centre (https://www.macleans.ca/economy/what-will-happen-if-trump-slaps-a-25-per-cent-tariff-on-canadian-made-cars/?utm_source=nl&utm_medium=em&utm_campaign=mme_weekly&utm_content=202508&utm_term=0&sfi=df0198bed6a37f0cdd34c52c77052eef ), the impact on Canada would be “disastrous.”

The oddity in applying these tariffs is that American consumers would be the first ones to feel the impact. According to industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants, automakers would pay an extra $5,000-$7,000 for the vehicle they plan to sell. “Unless the auto companies chose to eat some of the extra costs, it would price most of those vehicles out of the marketplace,” DesRosiers says. “There’d be no choice for consumers.” Americans won’t be happy paying thousands extra for a Toyota RAV4 simply because it came from Canada—meaning the nearly 1.8 million vehicles Canada ships south of the border annually would have a much tougher time finding a home.

This week President Trump imposed a 25% tariff on imported steel and a 10% tariff on imported aluminum products from Canada, Mexico, and the European Union. The rationale was that this was done for reasons of National Security. In view of the very modest size of Canada’s military and the longstanding, peaceful relationship between the two countries, this explanation is ludicrous.

We are also being led to believe that the President apparently took these actions to protect jobs in the steel and aluminum industries, to correct what he deems as unfair trade practices by other countries and to bully Canada and Mexico into making concessions on the new NAFTA agreement that has been under negotiation for many months. Again, these are weak reasons to damage the strongest trade relationship between any two nations in the world.

In the case of NAFTA, the most recent sticking point has become the “sunset clause.” Vice President Mike Pence advised Prime Minister Trudeau last week that he'd have to accept this clause, which would make the trade agreement subject to renegotiation every five years. Trudeau said he couldn't accept the terms. The sunset clause is just one sticking point. The U.S. is also seeking changes to the "rules of origin" that govern how much of a car must be manufactured in North American to avoid import taxes in the three countries that make up NAFTA.

As a Canadian businessperson, I have two messages for Prime Minister Trudeau, push back hard against these bullying tactics and hit President Trump where it hurts. As the world has seen, persuasion, charm, diplomacy, and logical reasoning don’t work with this president. The fact is that both French President Macron and German Chancellor Merkel, two long-time allies, went to the White House in recent weeks to reason with him. Their visits appear to have had no impact.

This week marks the six-month anniversary of the Donald Trump presidency. Four months ago, I posted a blog (http://www.dantranscon.com/index.php/blog/entry/will-donald-trump-be-a-successful-president ) that looked at the president’s strengths and weaknesses. I thought, at the time, that this might help provide some insights into his potential for success or failure in the job. These are my thoughts at this milestone.

Clearly president Trump has made several key decisions during this period. He terminated America’s interest in the Trans Pacific Partnership (TPP), took America out of the Paris Climate Accord, overturned president Obama’s decision to not permit the Keystone XL pipeline into America, changed the balance of America’s alliances in the Middle East, pushed hard for the repeal and replacement of Obamacare, initiated a review of America’s participation in NAFTA, instituted a ban on citizens from six primarily Muslim countries and oversaw the appointment of a new Supreme Court Judge, justice Neil Gorsuch.

While he has talked a lot about infrastructure spending, reducing taxes, building a wall between Mexico and the United States and tax reform, there have been few legislative achievements. Other than some positive stock market and employment numbers, most Americans are not seeing many tangible results from this president. Donald Trump’s overall approval rating stands at 39 percent, a historical low for a president in office for six months. On the bright side, his approval rating among Republicans stands at 85 percent. Looking back at my March blog, I now realize that my assessment of Donald Trump was largely correct. However, I now see some character traits more clearly and these traits are very problematic for him.

President Trump did have and still does have a vision of America. He frequently talks about “Make America Great Again” and about restoring lost manufacturing jobs to the United States. One of his biggest problems is that he lacks a coherent plan to make his vision a reality. Withdrawing from the Paris accord will not bring back lost coal mining jobs. Job growth in the energy sector will come from investing in the new sources that are growing rapidly. Withdrawing from TPP will hurt America’s trading relationships with countries in the Asia- Pacific region. His Make America a Loner Strategy is hurting the country’s relationships with many of its allies.

We are now four and a half months into the Trump presidency. While the president has not been able to achieve any significant legislative successes, he has been able to accomplish something much more far-reaching. He has managed to undo decades of American policy and dramatically reduce the country’s stature in the world. How do we make sense of Trump’s strange journey so far? These are my thoughts.

Donald Trump received 62 million votes in last year’s election. These votes did not come from a homogeneous base of voters. Rather, they came from the following groups.

Loyal Republican Voters

There are American citizens who vote for the Republican candidate in every election. While Donald Trump may have not been the preferred candidate for all Republican voters, the people who typically support this party voted predominantly for him. They expect him to uphold traditional Republican party values.