If a renegotiation of the North American Free Trade Agreement is to occur, Mexico and Canada would like it to start soon, but Commerce Secretary Wilbur Ross told Bloomberg yesterday that negotiations likely won’t begin until late this year and not get serious until 2018.
“I would like the results tomorrow, but that is not the way the world works,” Ross said Wednesday in an interview with Bloomberg Television. He said it probably will be “the latter part of this year before real negotiations get under way.”
Ross also said the United States has been in a “trade war” for decades. He said the Trump administration, however, will come into the new talks with a “big bazooka” that probably won’t have to be used.
The prospects of renegotiating NAFTA or adopting a Border Adjusted Tax as a tariff on imports has many Texas businesses nervous. The state is the largest exporter in the United States to Mexico. Out of $232 billion in exports from Texas in 2016, $92 billion went to Mexico, according to the U.S. Department of Commerce.
But there also is a round-robin trade going on. Independent auto parts manufactures located at the Toyota plant in San Antonio ship parts to Toyota assembly plants in Mexico, and then the vehicles return to the United States as completed vehicles. The same occurs in some electronics manufacturing.
The Trump administration has indicated the possibility of specifically targeting the auto companies for import tariffs, and Mexico has hinted that it will retaliate if a trade war develops. The likely targets of Mexican tariffs would be Texas-grown corn and beef.