Car industry may hold key to US success in Nafta talks

Washington

TO US President Donald Trump, America's US$500 billion trade deficit is a symbol of economic weakness. If he wants a revamped North American Free Trade Agreement (Nafta) to shrink that number, he'll need a seismic shift in how cars are made on the continent.

With negotiations expected to start in August, makers of everything from toys to microchips are making their case for how the Trump administration should reshape the 23-year-old trade accord with Mexico and Canada. Based on the president's zeal for reducing the deficit, the car industry could hold the key to US success in the talks. Mr Trump has threatened to walk away from Nafta if he can't get better terms.

The US had a US$63-billion trade deficit with Mexico last year, compared with a surplus of US$7.7 billion with Canada. The automotive trade deficit with Mexico was US$74 billion. In other words, if you took out trade in cars and car parts over America's southern border, the US would actually be running a trade …