Trump nixing NAFTA: good or bad for WNY?


Now that President Donald Trump has reached a tentative trade agreement with Mexico, in his words, a “replacement” for the North American Free Trade Agreement, known as NAFTA, business leaders are trying to figure out how the new pact might affect Western New York.

NAFTA was a three-way agreement between the United States, Mexico and Canada, and it has given a boost to cross-border commerce, while generating job creation and new business for companies in Canada and the U.S.

General Motors’ Powertrain plant in the Town of Tonawanda is one of the largest engine factories in the world, due to its components being shipped to Canada, and the Ford Stamping Plant in Hamburg sends many of his stamped parts to Ontario.

President Trump’s new tenative pact might be good for the U.S. and Mexican interests, but with Canada next on the the president’s agenda, automotive industry specialist Art Wheaton said Western New Yorkers may want to take notice, especially when it comes to tariffs on cars.

“It will have a fairly large impact because the tariffs would hit some of the hot-selling SUV’s that they have, at least, for Chevrolet and for a smaller extent for Ford.”

Trump is threatening a 25 percent tariff on Canadian vehicles coming into the U.S. which works out to about $8,000 per car, and the President is determined to come up with a deal or a tariff.

“One way or the other, we will have a deal with Canada.  It will either be a tariff on cars, or it will be a negotiated deal.”

Wheaton, of the Worker Institute at Cornell University, said a tariff could be bad news at General Motors’ Town of Tonawanda plant, which makes engines for cars like the Camaro that are assembled in Ontario, or the Ford Woodlawn plant which also sends parts for assembly in Canada.

“If you’ve got to pay an $8,000 or $10,000 premium for that, as opposed to buying a [Toyota] RAV 4, or some other small SUV, you may change your purchasing decision, or delay.”

If consumers decide to hold off buying a new car or getting a less expensive vehicle made elsewhere, Wheaton said the slowdown could have a domino effect on Western New York’s economy.

“It could lead to layoffs, downsizing. That hurts the local economy, it starts hitting the smaller businesses and restaurants. The people are not working, they don’t need as many people.”

President Trump has set a Friday deadline for Canada come to the bargaining table, otherwise, our “Neighbors to the North” might have to reach a deal separately from the agreement with Mexico–or not.

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