Farley Gives USMCA Survival a Coin-Flip's Odds

Ford CEO Jim Farley isn't betting the company on the North American trade deal that props up its business. Asked about the fate of the United States-Mexico-Canada Agreement, Farley put the odds of an extension at a "50-50 chance."

That's not a vote of confidence from the executive who has spent recent months lobbying publicly to keep the thing alive.

The USMCA is currently under review, and the Trump administration is pushing to sharply raise the required level of U.S. content in vehicles built across North America. It's also weighing the nuclear option of walking away from the agreement entirely.

Ford, predictably, wants the deal kept — with some tweaks. The automaker has long supported retaining the USMCA, as have the industry lobby groups it travels with, because the arrangement is distinctly advantageous for domestic manufacturers.

Extending it would reduce or eliminate tariffs Ford and its rivals are already eating, and preserve an edge over foreign competition, according to Farley. He's in good company: automakers, lobby groups, and Canadian officials are all urging Trump to leave the agreement intact.

Farley's argument centers on the competitive disadvantage he says tariffs and currency differences hand to foreign rivals. He has framed the stakes in blunt terms.

"USMCA is critical for America's top auto producer," he said previously. "Without the USMCA, it would be much harder for us to compete with global rivals, as I mentioned, such as Japan and South Korea, which have their own strong regional supply chains. They have weaker currencies. Look at the yen right now; it's at an all-time low, so they export that huge, enormous advantage, and they only have 12 percent to 15 percent tariffs."

He went further, laying out the math: "If they have onerous tariffs for our parts, and they can import at 15%, and they have a weaker currency, that is another 20% cost advantage, and they have local steel and aluminum production that is not tariffed."

Whether any of that moves the needle in Washington, Farley clearly isn't counting on it. A coin flip is a coin flip.

Images: [Ford, WhiteHouse.gov, Canadian government]

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