Why China’s going to love NAFTA 2.0

Why stricter country-of-origin rules in NAFTA won’t actually help any North Americans. PLUS: the world’s sexiest vacuum company is building a car

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Good morning! Here’s what’s on our radar at the moment:

Why China’s going to love NAFTA 2.0

Current North American Free Trade Agreement rules state that 60% of a product’s inputs must come from within the three member states to qualify for free-trade status. In a bid to boost American manufacturing, U.S. negotiators are reportedly pushing for higher limits in the updated agreement being worked on right now—perhaps even minimum levels of U.S.-made components. The highly integrated supply chains fostered by two decades of free trade might mean that’s a pretty bad idea, however:

Most economists, of course, say the U.S.’s demand for higher rules of origin is something between silly and dangerous. North American companies, led by the U.S.’s world-beating corporations, have spread out across the continent to reduce transportation costs, exploit cheaper labour, and source inputs from the most efficient producers. Mess with that production system, and you may end up messing with the ability of American companies to compete with their Asian rivals. Higher rules of origin might create more jobs, but in China, India, Thailand and Vietnam.

The U.S. grounds Bombardier’s Cseries jet

Late yesterday the United States announced it would slap 200%-plus tariffs on Bombardier’s CSeries jet, a mid-sized plane that—interminable delays or not—was supposed to save the Bomber’s bacon. At issue was whether the Canadian government’s plentiful assistance to the hapless aerospace giant constitutes unfair state intervention. The decision will make the CSeries uneconomical for American carriers, but beyond the threat it poses to Bombardier’s bottom line, this trade spat clouds the horizon for NAFTA: The Next Generation:

In response to a trade case filed by the American jet maker Boeing, the United States Commerce Department ruled that Bombardier’s CSeries aircraft, a smaller, regional aircraft that entered service last year, had received subsidies of 219.63 percent of the plane’s sales price, and it said it would begin collecting duties equivalent to that amount. That will more than triple the price of the new jet, chilling Bombardier’s future sales and potentially giving Boeing more space to expand into the market for smaller aircraft. “The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Wilbur Ross, the secretary of commerce, said in a statement.

Link: The New York Times

Dyson is making the leap to electric cars

Dyson, the company famous for see-through vacuum cleaners and inscrutable public bathroom hand-dryers, says it is plunging into the electric car business, releasing its first model in 2020. While the company has demonstrated a remarkable knack for getting consumers to pay a premium for its high-design hardware, the leap from hairdryers to automobiles will be a challenge. But the company believes that a new type of battery will be its secret weapon:

Dyson is joining a crowded field, with manufacturers from Volkswagen AG and Daimler AG to Toyota Motor Corp. and Elon Musk’s Tesla Inc. all competing to popularize electric vehicles. While most of these companies are using lithium-ion batteries in their current models, Dyson said its car would use solid-state batteries that are smaller, more efficient, easier to charge and potentially easier to recycle. Toyota is also working on solid-state batteries and said earlier this year it hopes to have them in electric vehicles by the early 2020s. Dyson said his electric car would be “radically different” than those being designed by other car makers, including Tesla. “There’s no point doing something that looks like everyone else’s,” he said. “It is not a sports car and not a very cheap car.”

Link: Bloomberg

WATCH: Don’t say “velcro”

The legal team at VELCRO® Brand Companies has apparently had it up to here with hearing people say “velcro shoes” or “just velcro that to the wall.” The problem being that velcro—sorry, VELCRO®—is the brand name of a very particular product, not just anything that sticks together with hook-and-eye temporary adhesive-like textiles. To try to drive the point home, the company has released what is actually a pretty good parody video that makes their point without being too hectoring: VELCRO® is neither a noun (“velcro skates”) nor a verb (“velcro the top closed”), but a trademark that the company must at least take reasonable steps to protect. Honestly, it might be a little late for that: “Velcro” already occupies a shadow zone somewhere between “Linoleum” and “Kleenex,” two famous examples of trademarked terms, the first hopelessly lost to indiscriminate overuse, the second clinging to brand-name status (despite being what just about everyone calls the disposable tissue they sneeze into). Dreaded “genericization” is exactly what this video is intended to prevent.

Link: YouTube

Earnings reports today

Canadian publicly traded companies of note scheduled to report quarterly earnings today:

AGF Management (AGF.B), Atalaya Mining (AYM), Boyuan Construction Group (BOY), Katanga Mining (KAT), CounterPath Corp. (PATH)

Thanks for reading! Have a truly excellent day.