00:00Where do we stand at this actual moment with USMCA?
00:03I know we're thinking about its renegotiation, but how has this industry fared so far under it?
00:08So, as you remember, President Trump negotiated USMCA the first round, saying he hated NAFTA.
00:13But he put in it that after six years, he was up for review in negotiation.
00:17That falls right now.
00:18Frankly, talking to the negotiators, they thought that six years would take them past the Trump administration, and he's back
00:24again.
00:24And he said that he really wants some revisions because he thinks Canada and Mexico are taking advantage of us.
00:29But to your question, the US auto industry, by and large, if you talk to them, say, it's been working
00:33pretty good.
00:33Let's not mess it up.
00:35So are they really fearful then with this renegotiation?
00:37Yeah, I think they're fearful mainly about the uncertainty because they need to make long-term investment decisions.
00:43And if they don't quite know what the rules are, they expect that they're not going to just blow it
00:48up and have it go away.
00:49But if you're investing a lot of money in capital, plant, and equipment, which President Trump wants them to do,
00:55then you need some certainty, as you know, to know what the rules are going to be.
00:58So is that Trump's administration's goal in all of this then, figure out a way to get more investments within
01:04the United States itself?
01:06Yeah.
01:06I mean, ultimately, I think President Trump, as he says again and again, is to eliminate trade deficits.
01:13And despite the USMCA, there are still trade deficits with both Canada and Mexico.
01:17So that's ultimately what he focuses on.
01:18And that's why people are going to have a tough time with the negotiations.
01:22But another factor in all this is China.
01:24When it comes to the auto industry, China's not at the table to have this renegotiation.
01:28But China is a really big, looming factor that they have to figure out how to defend against China.
01:34And that's true for Canada, Mexico, and the United States.
01:36Well, I mean, it's been a really clear stance from this administration that you can't have Chinese vehicles in here.
01:40But what about for these manufacturers in North America that are selling into places like Europe or in Asia,
01:46where you do have competition from Chinese cars, how much pressure are they under right now?
01:51Beyond that, Danny, beyond that, Chinese companies have invested a lot in Mexican plants down in Monterrey and around there.
01:57So there are parts coming in that come from Chinese companies.
02:00And one of the things they're talking about now as a possibility is not just having a rules of origin
02:04that says it has to be made in North America,
02:06but basically says you cannot have very much Chinese origin parts no matter where they're coming from.
02:12If they've made them, then you can't include it in it, have new limitations.
02:15But isn't that part of this irony that if you had allowed Chinese plants to come into the United States,
02:20that would bring money in and more manufacturing?
02:22Well, it's interesting. I'm glad you raised that because you saw Paul Krugman there.
02:25And one of the questions I asked Paul was, look it, why don't we just let them come have their
02:30plants?
02:30So we would do Toyota, for example, in Kentucky.
02:32Let them come in, build their plants here. We'll learn how they build their nifty cars.
02:37And Paul said, no, China doesn't want that.
02:39Ironically, what we did with China, where we went to China and educated them in know-how and how to
02:44do things,
02:45China's putting a lot of restrictions on saying, we don't want you to know how we're making things.
02:49Interesting. So when this is all said and done, what did you hear from the industry?
02:53What are they saying when they lobbied the Trump administration?
02:56What are their hopes about how this renegotiation takes place?
02:59I mean, I don't want to speak for the industry.
03:01My impression was if they said today you can just have the same agreement going forward,
03:05they'd take it in a second, particularly if it was for some period of time.
03:09There's concern that it might go to year to year, which they're very—that's the worst case for them
03:12because then they know what's going on. But they would basically take this deal.
03:15They don't want a lot more. They just want to protect what they've got.
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