But even products built north of the border were at risk, according to industry analysts. Anything more than a brief shutdown could have had “devastating consequences” on the U.S. assembly and parts plants that employ about 1 million American workers, cautioned David Cole, director-emeritus of the Center for Automotive Research, or CAR.
Since the original North American Free Trade Agreement, or NAFTA, went into effect on January 1, 1994, “the auto industry has developed a highly integrated manufacturing network that has essentially eliminated borders” between the three trade partners, Cole added.
CAR research shows that $112 billion in autos and auto parts were imported from Mexico in 2018, while $36 billion was exported. On an average basis, that would work out to more than $400 million in automotive goods per day that could have been stuck at the border.
In some instances, the impact, as Cole noted, could have been minor. Dealer’s routinely keep about 60 days of vehicle inventories on their lots, though that can run far longer for slow-selling models.
But American-made vehicles, especially hot-selling products such as the new Ford Ranger pickup assembled in suburban Detroit, could have been hit by a border closure. While the figure varies by manufacturer and model, industry data indicate that 38% of the imported parts used in American plants come from Mexico.
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