[gaukes]

The big issue seems to be that companies don’t know how long this version of NAFTA will last. If Biden becomes the next president and signals support for keeping the agreement the way it is, there’s a good shot they’ll move to the USA.

[tzs]

Even if they were sure it was going to last, why would they move to the US?

If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages.

If they move to the US, they will be paying US levels of pay for both the cars they build for the US and Canada and the ones they build for the rest of the American continents.

Another disadvantage of building in the US cars for export to other countries that are not Canada or Mexico is they would have to worry about a trade war between the US and those other countries. If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US.

[AnthonyMouse]

> Even if they were sure it was going to last, why would they move to the US?

If it no longer saves them money to be somewhere else, it's good PR. You get to hang a huge "made in USA" flag on your dealerships.

> If they stay in Mexico, they can build cars for the US and Canadian markets and make sure that 40% of the parts are made by workers making $16 an hour to avoid tariffs, and in the same plant they can build cars for the rest of the countries in the Americas but use parts made by workers making more normal Mexican wages.

People in the rest of the Americas buy different vehicle models. Chevy Beat, Nissan March, Volkswagen Vento. Very popular in Mexico.

The US market also just dominates the market on the entire continent. It has almost as many people as all of South America, but more importantly, they're the people who buy new cars. Many of those other countries not only have lower car ownership rates, a large fraction of their cars are used cars exported from the US market.

So they don't buy nearly as many new cars and most of what they do buy are different vehicle models.

> If the current US administration slaps tariffs on country X, and X retaliates with tariffs on some US export and happens to pick cars as one of those exports, that is going to hurt the car company's sales. If they had remained in Mexico, they would not have to worry about US trade wars messing up their sales outside the US.

This is assuming cars being assembled in Mexico are being exported in large numbers to the countries likely to get into a trade war with the US, which are predominantly on other continents. But the cars sold in those markets are typically also manufactured there. The Yaris is popular in Europe, they make them in France. The Buick Excelle is popular in China, they make them in Shanghai.

The Toyota Corolla is manufactured on six continents.

The cars they make in North America are mostly going to the US. And a trade war between the US and e.g. Costa Rica doesn't seem that likely, or if it somehow happened, that much of a concern for US auto manufacturing.

[AnthonyMouse]

He could also signal support for leaving it the way it is right now and create an immediate benefit to American workers, but he doesn't really have the political incentive to signal that right now even if that's what he intends to do. (And the political incentive only changes if voters respond negatively to that sort of political gamesmanship.)