Car Industry

Nissan to increase US investments after NAFTA overhaul

The new US-Mexico-Canada agreement is already making waves in the American auto industry.

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Renault-Nissan-Mitsubishi CEO Carlos Ghosn at the Paris Motor Show this weekend.

Vincent Isore/IP3/Getty Images

The ongoing reorganization of US trade relations has had a significant impact on companies such as Ford. Last week, we reported that President Trump's metal tariffs had already reduced Ford's profits by $1 billion. But this week, the tide appears to be shifting. On Tuesday at the Paris Motor Show, the CEO of the Renault-Nissan-Mitsubishi alliance, Carlos Ghosn, told Automotive News that he expects US investment to increase as a result of NAFTA's impending overhaul.

On Sunday, the US, Mexico and Canada agreed to replace their former trade agreement with a new one called the US-Mexico-Canada Agreement, which among other things, would require some US suppliers to increase their minimum wage to $16 per hour.

That could increase costs, but it will also come with benefits. Ghosn said this will prompt supply-chain and organizational changes and will result in more money coming to US suppliers. "In my opinion," he said, "there will be more investments in the US, without any doubt."

While the US can expect more of Nissan's dollars, Ghosn said his company will continue to invest in Mexico, where it currently operates three production facilities. Interestingly, Ghosn also told Automotive News, "No agreement would have had a much more devastating impact on our operations in North America."