So much for the USMCA agreement providing certainty to businesses — and so much for free markets.
In the immediate term, the Trump administration’s efforts to dictate how and where automotive parts are built risks ballooning costs for an industry already grappling with weaker demand for sedans. It also raises the risk of factory decisions being used as political currency in swing states, an almost unfathomable shift in U.S. policy.What’s mind-boggling about this push for control over automotive supply chains is that it entails the same kind of government oversight and closed-market mentality that U.S. companies and the government have (rightly) criticized in China. This should raise red flags for manufacturing companies about the longer-term ramifications of the “phase one” deal the U.S. is currently negotiating with China. It’s perhaps worth asking again what Trump is really trying to solve in his trade war with China.
The two sides appear to have made progress on agricultural purchasing commitments and some intellectual property and currency provisions. China has also pushed ahead with a loosening of foreign investment rules. But it remains unclear if and when the Trump administration will remove existing tariffs on China and if there will ever be a “phase 2” deal. It doesn’t seem as if the Trump administration’s intent is to make it easier to do business in China — or Mexico and Canada. Or even the U.S., for that matter.
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Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.