This Week's Highlights
- The emergence of China tariffs and a potential trade war over the past month have pushed NAFTA negotiations out of the media’s spotlight.
- We believe the automotive rule of origin threshold will be increased. U.S. automotive parts manufacturers may benefit from a higher threshold, while car companies may need to relocate factories and reconfigure supply chains.
- Kansas City Southern (KSU): Railroad transportation company with operations in the Midwest, Mexico, and Panama. Its an integral part of the U.S.-Mexico supply chain for the automotive, chemical, agriculture, and energy industries. In our view, KSU benefits from NAFTA continuation.
- Automakers: Ford (F), General Motors (GM), Toyota (TM), and Fiat Chrysler (FCAU) may be negatively impacted if management teams need to select new parts suppliers or build new factories to meet a higher NAFTA content threshold.
- We are optimistic of a NAFTA agreement in principle by July, which would relieve some market uncertainty. Read about other 2Q'18 legislative items we are following.
Read More: NAFTA Cheat Sheet.
For more policy insights and market impacts...