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Japan’s Suppliers Stymied by Delayed USMCA

Delays in ratifying the updated North American Free Trade Agreement are leaving Japanese parts suppliers uncertain about where to invest in new capacity, The Nikkei reports.

Delays in ratifying the updated North American Free Trade Agreement are leaving Japanese parts suppliers uncertain about where to invest in new capacity, The Nikkei reports.

The U.S., Mexico and Canada signed the pact last November. But to date, only Mexico’s government has ratified it. The so-called U.S.-Mexico-Canada Agreement sets stronger local content requirements for vehicles produced by the bloc.

But until the treaty is ratified by all three countries, Japanese suppliers say it’s easy to continue paying tariffs than to gamble on realigning their supply chains with new factories in the U.S.

“Given that U.S. trade policy can change with a tweet, it’s hard to make a decision,” one executive tells The Nikkei. The newspaper notes that President Donald Trump has been unclear about whether the U.S. will impose import tariffs on goods from Canada and/or Mexico even after USMCA goes into effect.

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