{"text":[[{"start":5.85,"text":"Here we go again. Talks started this week for a revamp to the USMCA trade deal between the US, Canada and Mexico, formerly known as Nafta. Donald Trump’s earlier renegotiation in 2018 secured a change of name but not much difference in substance. His simple-minded protectionism now threatens at best further irrelevant tinkering and at worst a serious rupture."}],[{"start":31,"text":"As usual no one knows what Trump will do, including him. On the one hand, he has long hated Nafta, which soon acquired cartoon super-villain status among US globalisation sceptics after its launch in 1994. On the other, last year he carved out partial USMCA-related exemptions to his general tariffs to mitigate the blow to cross-border North American auto supply chains."}],[{"start":56.95,"text":"In truth, each Trump-induced iteration takes the discussions further away from reality. Certainly, the US exerts a colossal gravitational pull on its neighbours — whatever it might dream, Canada will not become a trade or geopolitical annex of the EU. But in rapidly expanding areas of trade integration, particularly green tech and specifically electric vehicles, Trump has largely decided to pull the US out of the game altogether."}],[{"start":86.4,"text":"In the talks with Mexico this week, US trade representative Jamieson Greer is focusing on an issue his predecessor and mentor Robert Lighthizer spent a lot of time on in the previous negotiations — tinkering with rules to coerce more of the production network to locate in the US."}],[{"start":103.10000000000001,"text":"In particular, Lighthizer expended great technical and diplomatic effort to squeeze low-paid jobs out of the Mexican part of the supply chain. He drove through an agreement that 40-45 per cent of auto content be made by workers earning at least $16 an hour, and created a rapid-response mechanism allowing swift investigations of allegations of labour rights abuse."}],[{"start":125.5,"text":"Late last year the president said of the “Big Three” US automakers Ford, GM and Chrysler (now part of the Stellantis group): “They’re leaving Mexico and they’re leaving Canada . . . because of tariffs, they’re all coming back, so it’s a great thing.” In fact the policies have had only limited effect, and hence here we are again. The US labour unions continue to usher administrations down the primrose path to protectionism: the United Auto Workers union has demanded Trump rip up USMCA if he does not get more local content requirements."}],[{"start":155.8,"text":"The US is trying to eke out marginal gains in a zero-sum battle over the share of internal combustion engine (ICE) car production. In reality, the auto industry faces a rapidly changing world to which USMCA renegotiations are peripheral. The capital-intensive car industry is not a great job creator in any case: it employs around 950,000 workers out of a total US workforce of 163mn. The actual gains, for both producers and consumers, are in the vast advances in electric vehicle and battery production."}],[{"start":188.15,"text":"The US was a slow adopter of EVs. For decades its indigenous producers huddled in a sheltered corner of the US market, specialising in gas-guzzling pick-up trucks and SUVs, their decisions warped by longstanding tariff protection and a ludicrously low federal gasoline tax. To his credit, Joe Biden attempted to get a US EV sector going, admittedly through sub-optimal protectionist subsidies, only to have it sabotaged by Trump. US auto manufacturers had started to reorient towards EVs. Now they have been forced to pivot back."}],[{"start":219.8,"text":"Cross-border North American auto supply chains were rapidly transforming and the importance of US carmakers was shrinking even before the EV issue became dominant. Research by the Trillium Network centre at Western University in Ontario shows that by 2025, Japanese carmakers Toyota and Honda made up 77 per cent of Canada-based auto manufacture, up from 44 per cent a decade earlier."}],[{"start":244.65,"text":"Since Trump’s re-election, GM, Ford and Stellantis have all retreated from plans to increase EV production in Canada. To get the EVs demanded by their consumers and to meet their commitment to reducing carbon emissions, Mexico and Canada are importing Chinese cars and inviting them to produce in-country, for export as well as the domestic market. Stellantis may repurpose a Canadian plant originally intended to make its own EVs for the Chinese company Leapmotor, which it partly owns. Unless Trump decides to follow his occasionally expressed wish to allow Chinese auto producers to invest in the US, and permits Chinese software in connected cars, the North American auto market will splinter and the US continue to drift into becoming a haven for high-priced, low-tech EVs."}],[{"start":291.3,"text":"It’s hard to think of a precedent for the extraordinarily destructive nature of what Trump is doing with USMCA. He’s undermining a highly efficient and successful trading area, not just by a destabilising attempt to force change in existing supply chains but by opting out of a century-defining new technology which the two other bloc members see as their future. Whether Trump gets his USMCA renegotiation is not the real issue. The underlying problem is that he’s hopelessly stuck in a zero-sum game based on obsolescent technology while the world is rapidly moving on."}],[{"start":333.15000000000003,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780023057_5591.mp3"}