WASHINGTON, D.C. -

American International Automobile Dealers Association president and chief executive officer Cody Lusk likely summarized reaction to questions perhaps being answered with Monday’s trade announcement originating at the White House.

“Uncertainty is the enemy of business, large and small,” said Lusk, who welcomed the news that the United States, Canada and Mexico have all agreed to a revamped version of the North American Free Trade Agreement (NAFTA), now known as the United States-Mexico-Canada Agreement (USMCA). The new treaty could be signed by all countries within 60 days and will then need to be passed by Congress.

“USMCA is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the U.S. and will bring all three great nations together in competition with the rest of the world,” President Trump said.

According to bullet points distributed by the White House, the Trump administration said American auto manufacturers and workers will benefit from new rules of origin requiring 75 percent of auto content to be produced in North America.

The White House also stated the new agreement will incentivize billions of dollars in additional United States vehicle and auto parts production.

The administration went on to insist that workers will also benefit from rules that will incentivize the use of high-wage manufacturing labor in the auto sector, supporting better jobs for American workers.

“Today’s announcement of a trilateral agreement between the U.S., Canada, and Mexico allows the entirety of the auto industry, from manufacturers to hometown dealers, to once again plan for the future,” Lusk said. “AIADA’s 9,600 dealer members look forward to learning additional details about the pact, and its impact on the auto sector, in the coming weeks.

“We remain deeply concerned over the Department of Commerce’s ongoing 232 investigation, and the threat of massive new tariffs on imported autos and parts,” Lusk continued.

“Dealers will continue to urge the Trump Administration and Congress to pursue positive trade policies that keep the American auto industry open, dynamic, and competitive,” he went on to say.

AIADA said America’s 9,600 international nameplate dealers employ more than 577,000 Americans, resulting in a payroll of $32 billion and an additional 527,000 indirect jobs. Last year, they sold 8.4 million vehicles to American consumers — 59 percent of total U.S. retail vehicle sales.

Analyst reaction

An array of experts shared their assessment of Monday’s developments with Auto Remarketing.

Cox Automotive chief economist Jonathan Smoke began by pointing out that nearly a quarter of all new vehicles sold in the U.S. are assembled in either Mexico or Canada.

“And given decades of supply chain evolution based on NAFTA, a substantial portion of the vehicles assembled within the U.S. are dependent on components from Mexico and Canada,” Smoke said. “The new deal ensures the availability of a diverse set of vehicles from the most affordable compacts cars to the most popular pickups and will prevent a surge in pricing.

“That said, the industry is not out of the woods for price problems caused by new tariffs,” he continued. “Nearly a quarter of new vehicles bought by Americans are assembled in countries outside of North America and a substantial number of vehicles sold are dependent on parts from countries like China that remain very much in the crosshairs of the administration.”

Cox Automotive senior economist Charlie Chesbrough joined the conversation, by acknowledging Canada joining the new trade agreement was expected.

“This a great news for the automotive industry as, once approved, longer-term strategic sourcing and manufacturing planning in the region can finally resume,” Chesbrough said.

“Strategic planning for the North American industry has been in a constant state of flux over the last 18 months due to volatile trade policies. Now with some clarity around the import tariff policy for the region, suppliers and OEMs can refocus on making and selling products,” he continued.

“However, the steel and aluminum tariffs remain and both are having negative effects on auto maker profitability,” he added.

Another member of the Cox Automotive team — Autotrader executive analyst Michelle Krebs — cautioned about how much reading might be ahead.

“At more than 1,000 pages in length, we won’t fully understand the overall impact of the trade agreement negotiated over the weekend without further study and until it is officially approved later this year,” Krebs said.

“However, the fact that there is a directional agreement at all, one that has a long-term horizon of 16 years and will allow automakers and their suppliers to do long-range planning, is a plus,” she went on to say.

Edmunds senior manager of industry analysis Ivan Drury also chimed in about Monday’s developments, touching on how it still might be challenging for franchised dealerships to finalize deliveries of new vehicles.

“At first blush, the USMCA deal appears to be saving the automotive industry some major headaches, but we’re not quite out of the woods yet,” Drury said. “The elimination of a 25 percent tariff on imported vehicles is a huge win, but the new regional value content requirements mean that automakers will not able to source parts as freely, so there will be added costs associated with vehicle manufacturing.

“Depending on how high these become there could be setbacks to standard vehicle content or more content could become optional with higher markups,” he added.

“Given that new vehicle prices are already stretched to record highs, things could take an ugly turn for consumer wallets, especially considering the trend of continuously rising interest rates,” Drury went on to say.