US Nafta negotiation objectives on collision course with car industry

Washington

THE Trump administration has set a collision course with the car industry as it launches renegotiations of the 23-year-old Nafta trade pact this week, aiming to shrink a growing trade deficit with Mexico and tighten the rules of origin for cars and parts.

The car industry has been the focus of US President Donald Trump's anger over the North American Free Trade Agreement, which he blames for taking car factories and jobs away from America to low-wage Mexico.

The US had a US$74 billion trade deficit with Mexico in cars and car parts last year, the dominant component of an overall US$64 billion US deficit, according to US Census Bureau data.

"The Trump administration has framed its Nafta negotiating objectives around reducing the trade deficit with Mexico," said Caroline Freund, a senior trade fellow at Peterson Institute for International Economics. "If it doesn't touch cars,…