How Canada’s Auto Industry Is Vanishing under NAFTA

Speaker: Jeff Rubin

August 16, 2017

How Canada’s Auto Industry Is Vanishing under NAFTA

The North American Free Trade Agreement (NAFTA) was supposed to be good for Canada, Mexico and the United States, allowing for duty-free trade and supply chain integration across all three economies. But Canadian and American yearly vehicle production levels remain flat while Mexican output levels are surging. Industry data points to a large-scale migration of the industry to Mexico over the last decade, where wages are much lower and therefore industry profit margins are higher. US President Donald Trump has pledged to renegotiate NAFTA and restore the industry’s once sizeable economic footprint in the US economy. As renegotiations begin, what are the best trade policy options for Canada? CIGI Senior Fellow Jeff Rubin explains the current economic state of the Canadian automotive industry, and offers options for how these renegotiations could benefit Canadian auto workers. NAFTA renegotiations could be an opportunity to reverse the decline in Canadian auto manufacturing, but if the course goes unchanged, the industry will continue to shrink.

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