CTH- The issue is basic to the construct of the USMCA (NAFTA replacement).
BMW made a multi-billion-dollar investment in Mexico in anticipation of exploiting the NAFTA loophole. President Trump has closed the loophole. The new USMCA agreement requires 75% of automobile parts made in North America; and 45% must come from plants with minimum labor costs ($16/hr), or face tariffs upon export to the U.S.
As a result BMW is now considering opening those higher-wage component supply operations in the U.S.
LOS ANGELES (Reuters) – BMW (BMWG.DE) is considering a second U.S. manufacturing plant that could produce engines and transmissions, Chief Executive Harald Krueger said on Tuesday, shortly after a report that U.S. President Donald Trump would impose tariffs on imported cars from next week
[…] BMW is considering changes to U.S. operations as sales in the region grow, Krueger said. BMW has a U.S. vehicle assembly plant, in South Carolina, is planning to open a Mexico factory next year, and is considering changes to its current scheme of importing engines and transmissions.
“We’re at the range where you could think about a second location” in the United States, he said, adding that such a factory would provide a natural currency hedge. (more)
Oddly enough we predicted this likely move in August: […] At the 30,000 ft level, the USMCA deal positions Mexico to retain their current multinational investments; and through a series of sector-by-sector standards on origination the deal simultaneously closes the fatal NAFTA loophole. The agreement makes an economic manufacturing partnership between the U.S. and Mexico; and for assembly products third parties will have to produce parts and origination material within the U.S. and Mexico. more here
And if there’s one thing a BMW needs, it’s a steady supply of parts.
It makes sense to manufacture here and GM is going to Mexico. No wonder it was bankrupt.
Good, they can take over the plants in MI that GM is leaving.
$*%&@*$ GM.