The North American Free Trade Agreement, or NAFTA, was signed into in 1994 by President Bill Clinton and his Mexican and Canadian counterparts. The agreement removed taxes on consumer goods and other products traded between the three countries and included protections for copyrights, patents, and trademarks. While all of that sounds good on paper, NAFTA has not been without its critics in its 23-year history, who claim the trade agreement takes jobs away American workers and is unfairly skewed towards Mexico and Canada. Among the most vocal critics of NAFTA is President Donald Trump, who has called it the “single worst trade deal ever approved in this country” and has called for NAFTA to be repealed. Those calls have prompted worry from many politicians and corporate executives alike. Just this week, Fiat-Chrysler CEO Sergio Marchionne came out against the repeal of NAFTA, claiming American consumers will ultimately pay the price.
In an interview with CNBC, Marchionne says it will be consumers, not foreign governments, who pay the price if NAFTA does end up getting repealed by the Trump administration. “The consumer, in the absence of a realignment of production facilities, will pay a price,” Marchionne told his interviewer, adding that this price “is not insignificant.” NAFTA has allowed automakers to take advantage of cheaper labor and manufacturing costs in Mexico, lowering the price of cars, mainly heavy-duty vehicles.
Fiat-Chrysler has already announced that the auto giant will soon move production of heavy-duty pickups from Mexico to the United States over the next two years. That announcement was made in part to alleviate President Trump’s and other politicians’ claims that NAFTA is taking American jobs, and will reduce the risk of an increase in tariffs on Mexican-made vehicles. Still, with so much talk of NAFTA repeal, American car buyers might soon face higher prices if the warnings of Marchionne and other industry insiders go unheeded.