President Trump's decision not to join the Trans-Pacific Partnership and his interest in renegotiating the North American Free Trade Agreement (NAFTA) are going to make many companies rethink investment strategies and supply chain strategies, Bloomberg reported.
Canada and Mexico have said they’re willing to open talks on updating the NAFTA agreement.
Insistence on a mechanism for balancing trade between the US and Mexico or pushing for a specific import tax on Mexican goods to offset that country’s domestic value-added tax would spell trouble for the pact, said Scott Lincicome, an international trade lawyer with White & Case in Washington, DC.
The negotiations might affect NAFTA panels that determine a product’s eligibility for lower NAFTA tariffs.
"If these end up being hypertechnical negotiations on rules of origin, I don't think you’re going to see a significant controversy," said Lincicome. "If they’re really broad-based radical changes, then you have a totally different story."