According to REUTERS, an executive at Mexican auto parts maker Rassini (RASSNICPO.MX) said on Tuesday August 28, that he saw little chance the United States would scuttle the North American Free Trade Agreement (NAFTA), despite promises by President-Elect Donald Trump to pull out of it.
“Although President-Elect Trump has commented that he may end NAFTA, we believe this is highly unlikely,” Eugenio Madero said during a conference call with analysts, adding that the deal benefits both Mexico and the United States.
If Trump went ahead with the plan, Madero said Mexico would revert to “most favored nation” status and autopart makers would be subject to maximum tariffs of 2.5 percent, according to World Trade Organization rules.
“The cost will eventually be passed on to the customer,” Madero said. Rassini has operations in the United States, Mexico and Brazil.
During a long and bitter campaign, Trump threatened to scrap NAFTA if he could not renegotiate it to get better terms for U.S. workers. Companies worldwide are on edge, fearing a new wave of American protectionism could damage international trade.
Since NAFTA took effect in 1994, Mexican exports to the United States have jumped six-fold to some $320 billion a year, transforming a once-closed economy into a hub for investment and a workshop for some of the world’s biggest companies.
(Reporting by Joanna Zuckerman Bernstein and Alexandra Alper; Editing by Andrew Hay for REUTERS)