The proposed U.S. tariffs on car imports will have far reaching negative implications for the whole auto industry, according to Moody’s Investors Service.

The research firm said higher tariffs will cause problems across the car industry’s global supply chain.

“Tariffs on imported cars, parts would be broadly credit negative for industry,” Moody’s said in a note to clients Monday. “A 25% tariff on imported vehicles and parts would be negative for nearly every segment of the auto industry — carmakers, parts suppliers, car dealers, and transportation companies … Should any tariffs be levied, carmakers would need to absorb the cost to protect sales volumes while hurting profitability; increase prices to pass the tariff costs to customers, which could hurt sales; or a combination of both.”

President Donald Trump threatened a 20 percent tariff on auto imports from the European Union last week.

“Based on the Tariffs and Trade Barriers long placed on the U.S. & its great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” he tweeted on Friday.

As part of tariffs expected to go online July 6, the administration also has put a 25 percent tariff on Chinese goods including autos.

Moody’s said American automakers will not be immune from the import tariffs. The firm noted both General Motors and Ford depend on imports from Mexico and Canada.

“Tariffs would be a negative for both Ford and GM. The burden would be greater for GM because it depends more on imports from Mexico and Canada to support US operations,” the report said. “In addition, a significant portion of GM’s high-margin trucks and SUVs are sourced from Mexico and Canada … Both manufacturers would need to absorb the cost of scaling back Mexican and Canadian production and moving some back to the US.”

Trump’s trade policy is already spurring companies to change their manufacturing plans.

Shares of Harley-Davidson plunged Monday after the iconic American motorcycle manufacturer said it will begin shifting some production overseas to offset the impact of retaliatory EU tariffs on certain U.S. goods.

As President Donald Trump escalates his threats to impose tariffs on cars imported to the United States, the new leader of the union’s General Motors Co. department is taking a hard line on the Detroit automaker’s decision to assemble in Mexico a new crossover carrying the revived Blazer nameplate.

Moments after GM revealed the 2019 Chevrolet Blazer at an event in Atlanta, United Auto Workers vice president Terry Dittes declared the news “disappointing to UAW families and communities across this country.”

“This is all happening while UAW-GM workers here in the U.S are laid off and unemployed,” Dittes said in the statement released Thursday night. “We in the UAW have always supported products manufactured and produced in the U.S. and will continue to do so as a part of the fabric of our union.”

GM says the decision to build the Blazer in Mexico was made at least two years ago, and that three plants were considered for Blazer production. Two of those plants were UAW shops in the U.S., but at the time the “future forecasts” saw those plants already at full capacity, a company spokesman said. The automaker declined to identify the plants in the U.S. it was considering for Blazer production.

Spokespeople for the Detroit automaker said the union likely knew of the production plans for the Blazer ahead of the Thursday announcement, but new leadership may not have been briefed.

Dittes took over the union’s GM department from Cindy Estrada after the UAW Constitutional Convention earlier this month. Both Dittes and Estrada were elected as part of new president Gary Jones’s ticket at the convention, and Estrada was reassigned to the Fiat Chrysler Automobiles NV department.

The elections come about a year before the Detroit Three and the UAW return to the negotiating table to draft new collective bargaining agreements in the fall of 2019.

Trump has taken an increasing harder line on punishing companies for manufacturing overseas. He has pushed for negotiating the terms of the North American Free Trade Agreement, declared tariffs on foreign steel and aluminum, and threatened punitive tariffs on vehicles from other countries, including Mexico and Canada.

On Friday morning, trade with Europe drew the ire of the president, who said in a tweet he wants a 20 percent tariff on all cars manufactured in Europe unless “Tariffs and Barriers are not soon broken down and removed.”

Trump’s tweet came hours after the European Union responded to barriers to imported steel and aluminum with tariffs on about $3.3 billion of American products. Those tariffs cover about 200 categories and target American-identified products including Harley-Davidson motorcycles, Levi Strauss jeans and bourbon.

Imposing tariffs on Europe would widen the president’s ongoing trade skirmishes. He has promised to impose 25 percent tariffs on $34 billion in Chinese goods beginning on July 6, a move that China has promised to counter — including a 25 percent tariff on U.S.-made cars.

MEXICO CITY (AP) — Mexico’s central bank has decided to raise its key interbank interest rate to 7.75 percent from 7.5 percent.

The bank cited uncertainty around negotiations on the North American Free Trade Agreement and Mexico’s upcoming July 1 elections.

The peso closed slightly stronger Thursday before the announcement, at 20.25 to $1. However, the peso has lost about 9 percent in value against the dollar over the last two months.

The Bank of Mexico said inflation decreased slightly in May to an annual rate of 4.51 percent. It was 4.55 percent in April.

Mexico’s top trade official is traveling to Japan this week as the Latin American nation seeks to diversify exports and investment amid an impasse in Nafta talks.

Economy Minister Ildefonso Guajardo said he still sees a high chance of a deal to update the North American Free Trade Agreement, but that the U.S., Canada and Mexico will need to show flexibility. The three sides will strongly engage next month, Guajardo was quoted by Reuters as saying on Monday in Tokyo, where he will meet Japanese officials and business leaders.

Nafta talks are on the back burner ahead of Mexico’s election on July 1, according to a person familiar with their timing, who asked not to be named citing private conversations. Uncertainty about the future of the trade deal increased this weekend after President Donald Trump clashed with Canadian Prime Minister Justin Trudeau just after a Group of Seven meeting ended in Canada.

Japan Ties

Guajardo will meet with Japan’s foreign minister as well as the minister of trade and commerce, his press office said in an emailed statement.

The world’s third-largest economy is the biggest market in the trade pact that succeeded the Trans-Pacific Partnership, which the U.S. abandoned a few days after Trump took office last year. The new deal, known as Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, was agreed on by 11 nations in March and approved by the Mexican Senate in April.

Deepening ties with Japan and the other nations in the Pacific deal is part of Mexico’s push to diversify exports. Currently, 72 percent of the nation’s $435 billion in goods sold abroad every year go to the U.S. The nation also reached a deal in April to update its almost two-decade-old free-trade agreement with the European Union and is working to make inroads to China, Brazil and Argentina.

Japanese automakers including Nissan Motor Co., Honda Motor Co. and Toyota Motor Corp. have plants across Mexico, and the nation has received more than $14 billion in foreign direct investment from Japan over the past two decades. That makes Japan the biggest Asian investor in Mexico, according to data from Mexico’s economy ministry. Still, Japan bought only 1.3 percent of Mexican exports in 2017, about half as much as China and trailing the U.S, Canada and the European Union, according to data from the International Monetary Fund.

President Trump appears prepared to unravel 70 years of pain­staking effort that the United States has led to build an inter­national system of trade based on mutually accepted rules and principles.

Ever since an agreement on trade emerged in 1947 from the ashes of World War II, presidents of both parties have pushed this system as a way to strengthen alliances and promote the expansion of democracy and prosperity in Europe and Asia.

But with Trump’s decision last week to enact aluminum and steel tariffs against U.S. allies in Europe and North America, he is subverting previously agreed-­upon trade pacts. The result is a brewing trade war with Canada, Mexico and Europe, which are expressing shock and bitter frustration while enacting tariffs of their own on a bevy of American products.

The measures announced last week went beyond Trump’s previous actions, such as pulling out of the Trans-Pacific Partnership, a recently forged trade agreement among 12 nations, and his efforts to renegotiate the North American Free Trade Agreement with Mexico and Canada.

Now, he has imposed restrictions on aluminum and steel imports in the name of national security, even though almost all trade and national security analysts agree that it strains credulity to say it is risky to source metals from allies with whom the United States routinely shares sensitive intelligence information.

Veterans of trade policy worry that tensions will further escalate, putting existing trade agreements in peril and the future of the World Trade Organization, the group that the United States helped establish in 1995 to adjudicate the rules of global trade, in doubt.

“Trump’s actions create a feeling of chaos and lawlessness. America is no longer abiding by basic due process and commitments made to other nations,” said Jennifer Hillman, a former commissioner at the U.S. International Trade Commission.

Trump administration officials say the reaction from the rest of the world has been overblown. They say they are still eager to negotiate and they are just trying to stop a flood of cheap Chinese steel on the world market that has harmed American jobs and industry. Commerce Secretary Wilbur Ross is heading a delegation in Beijing this weekend to “discuss rebalancing” trade relations between China and the United States.

Trump has argued that he’s trying to get other countries, especially China, to play by the rules, and the president’s advisers say trade agreements negotiated in the 1990s are past due for an update that better reflects the current realities of the global economy.

“When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!” the president tweeted Saturday, referring to the U.S. trade deficit in goods. (The overall trade deficit, which includes services, was $566 billion last year.) “The U.S. has been ripped off by other countries for years on Trade, time to get smart!” the tweet continued.

“We are the ones trying to save the rules-based trading system,” a senior administration official, who spoke on the condition of anonymity because they were not authorized to speak publicly, said in an interview Saturday. “Europe and Canada are cheating. They are giving subsidies to some of their industries and putting U.S. companies at an unfair disadvantage.”

The sudden U.S. hostility toward existing trade agreements comes at a fragile time. While the world economy has been chugging along, multiple countries are recoiling from the trend toward economic integration that has been continuing for decades.

Britain is in the process of exiting the European Union. With newly elected populists in power, Italy is dancing close to leaving the euro currency zone. And a leading candidate to be Mexico’s next president, Andrés Manuel López Obrador, is also a trade skeptic and may take an even more confrontational approach with Trump than the current president, Enrique Peña Nieto.

“The door is open to the system unraveling,” said Douglas Irwin, an economics professor at Dartmouth and author of “Clashing over Commerce: A History of U.S. Trade Policy.”

One reason for worry about things spinning out of control, trade experts say, is Trump’s apparent belief that he can use threats to coax concessions out of allies. While South Korea, Brazil and Australia have been more acquiescent, most of the world’s major powers have rejected his demands.

For example, last week Canadian Prime Minister Justin Trudeau revealed that he had rebuffed a request by Vice President Pence to resolve NAFTA negotiations with an agreement to revisit the terms of the pact every five years. That shattered hopes of Trump securing victory any time soon on NAFTA, and led the president to declare on Friday that he is considering abandoning the agreement altogether.

In the case of steel and aluminum, U.S. allies have refused to agree to quotas limiting their metals exports, thus forcing Trump to enact tariffs. Trump is acting more aggressively in part because a stable of cautious advisers has fallen away in recent months, and he has been emboldened by hard-line trade skeptics who have cast aside warnings about the economic pandemonium that could result from his confrontational behavior.

As a result, the United Kingdom, France, Germany, Mexico, Canada, Turkey and Japan have either begun or announced plans to launch countermeasures. They are also forging ahead with their own trade agreements without the United States, a situation that could put American companies at a disadvantage for years to come.

Numerous U.S. firms — and entire industries — are worried they could be caught in the crossfire of this escalating economic spat. Actions taken to fortify the steel industry could backfire by hurting other sectors dependent on inexpensive raw materials — possibly causing more job losses than jobs saved, economists say. And prices of many American goods — from cars to beer cans — could rise.

The cost of steel and aluminum tariffs for the average American family will be $210, estimates Mark Zandi, chief economist at Moody’s Analytics.

“This is basically a welfare scheme. You are taxing everyone in America to help a small number of people in the steel industry,” said Bart Oosterveld, director of the global business and economics program at the Atlantic Council.

Not every economist agrees, however, that the effect of the tariffs will be substantial.

“I don’t see a big risk to the global trading system. It’s not going to blow up the system,” said Peter Morici, a former chief economist at the U.S. International Trade Commission. “Trump wanted to send the Europeans a message on trade to get more concessions.”

Indeed, Trump’s tariffs so far are on a relatively small scale, hitting about $41 billion worth of steel and aluminum imports. But he has threatened to go after European-made autos next.

The bigger issue is a political one: the aggressive imposition of tariffs on an unprecedentedly wide variety of U.S. allies, and the use of national security as the justification for doing it.

As a result, America’s longtime partners are starting to view Trump’s move as a sea change in U.S. policy. Trudeau called the action “totally unacceptable.”

Cecilia Malmström, the European Union’s trade commissioner, said, “I would not use the term ‘trade war’ because it has a psychological effect.” But she added: “The U.S. is playing a dangerous game here.”

“This will have an economic bite, and it will last a long time,” said Adam Posen, president of the Peterson Institute for International Economics. “It will be hard to establish trust in the U.S. again, and all the uncertainty will drive down investment and productivity.”

Under WTO rules, the national security tariff is supposed to be wielded only in times of war or when there is a direct threat to a country. Trump’s team is arguing that any nation should be able to determine on its own when its national security is at risk and impose tariffs when it wants, a major shift that opens the door to any country erecting trade barriers whenever it wants.

“To me, it’s unequivocal that these U.S. tariffs are a violation of America’s WTO obligations,” said Hillman, a Georgetown Law professor. “Under the WTO, the U.S. committed to not discriminating among members of the WTO, so the U.S. can’t charge a 10 percent tariff on Canada but not Argentina.”

Past presidents from both parties worked hard to get other nations to join the WTO and adhere to a system that barred the arbitrary use of tariffs. Now the United States is facing multiple challenges at the WTO for inappropriate conduct.

If the United States loses such cases, Trump might simply ignore the rulings or even pull out of the organization. His administration has already blocked new appointments to the WTO’s appellate body, creating a backlog of trade disputes.

Some economists say that Trump is correct that trade has had some downsides that policymakers should address. But his explosive approach is misguided, they say.

“It is possible to address the negative consequences of liberalizing trade without destroying the global trade system, which has brought so much prosperity to the world,” said Minouche Shafik, director of the London School of Economics and recently deputy governor of the Bank of England.

While the lead negotiators for Canada and the U.S. were in intense meetings in Washington trying to find a breakthrough in the vexing NAFTA auto industry regulations, Mexico’s ambassador to Canada, Dionisio Pérez Jácome, was holding a series of meetings in Winnipeg spreading the word that Mexico is committed to free trade now and in the future.

In a speech to the Manitoba Chambers of Commerce on Tuesday morning, Jácome did his best to make the point that Mexico believes that a renegotiated NAFTA has to be one that should be truly trilateral that benefits each of the countries.

“We will continue to engage in negotiations in a constructive manner always keeping in mind that it should benefit all three countries,” Jácome said.

In addition to the auto sector, top of the agenda for Canada’s foreign affairs minister, Chrystia Freeland, on Tuesday was negotiating a further reprieve from potentially crippling U.S. tariffs on imports of steel and aluminum that expires on Friday, an issue she says is separate from the NAFTA talks.

That’s just one more deadline for trade negotiators to deal with on top of the looming national election in Mexico on July 1 and mid-term elections in the U.S. in November adding to the sense that negotiators are on the clock to complete the new NAFTA deal fast.

But Jácome stressed that it was more important for Mexico to achieve a good deal rather than a quick one.

Last week Mexican Economy Minister Ildefonso Guajardo said he believes there is a 40 per cent chance of the deal getting done before his country’s election.

“We are in no position to exchange quality for speed,” Jácome said.

There is no doubt that the NAFTA era has had a significant impact on Mexican-Canadian trade. Jácome pointed out that since the deal was signed in 1994 trade between the two North American countries has increased nine-fold.

In his first visit to Winnipeg — which Jácome said was at least partly to bestow the Order of the Aztec Eagle, the highest Mexican order awarded to foreigners, to Jim Downey, the long-time honorary consul to Mexico — he met with the premier, the mayor and several business groups.

“They were very productive meetings,” he said. “The business community in Mexico and Canada have been getting to know each other better. They are doing more trade and there are good opportunities to compliment each other. I believe we are on track to continue increasing trade.”

Imports from Mexico to Manitoba are almost triple the size of exports from here to there, but the pork sector has perhaps made the strongest inroads. This province is a major producer of Canadian pork and Mexico is an enthusiastic importer. It’s now Canada’s fourth largest export destination for pork and last year Manitoba represented about 43 per cent of the total, worth about $83 million.

Both Maple Leaf Foods and HyLife Foods, the province’s two largest pork processors, export to Mexico. HyLife has a plant with 200 workers north of Mexico City where it makes sausage for the Mexican market using Manitoba-produced pork products.

“The big thing about NAFTA, as the ambassador spoke about, is that it opened up the Mexican market for Canadian produced pork so that now Mexico is a major market for Canadian pork,” said Andrew Dickson, general manager of Manitoba Pork. “They are currently getting most of their pork from the U.S. But they wanted to diversify the sources of supply.”

Jácome spoke about how free trade — and not just with Canada and the U.S. but with more than 48 other countries as well — has transformed the Mexican economy and allowed it to diversify.

Mariette Mulaire, the CEO of World Trade Centre Winnipeg, said the desire to expand its trading perspective is one of the many examples of how the two countries share similar goals.

“There is absolutely an opportunity for Canada and Mexico to work together to develop even stronger links,” she said. “With the uncertainties around NAFTA (created by U.S. President Donald Trump’s repeated references to it being “the worst deal”)… we share the same kind of concerns.”

The Trump administration is considering new tariffs on imported cars in a move that trade analysts said was designed to put pressure on Mexico during the final stages of negotiations for a new North American trade deal.

Officials may cite national security grounds to justify a 25% tariff on imported vehicles, a senior administration official said, speaking on the condition of anonymity to discuss internal deliberations. President Trump used the same provision of U.S. trade law in March when he called for tariffs on foreign-made steel and aluminum.

An announcement of a formal investigation into the purported need for such industrial protection could come as soon as Wednesday evening, one industry executive said. Shares of European carmakers fell more than 1% on the news.

Negotiators for the United States, Mexico and Canada remain deadlocked over rules for granting duty-free status to vehicles under a new North American trade deal.The talks have been underway for more than nine months and appear likely to continue into 2019, Treasury Secretary Steven T. Mnuchin said this week.

The threat to impose an import tax on cars was seen as an attempt to press Mexican officials to accept a U.S. demand for a higher percentage of auto content to be made in American factories.

Talks over a replacement for the 1994 North American Free Trade Agreement among the United States, Mexico and Canada have made limited progress.

Negotiators remain divided on a host of contentious U.S. proposals, including a provision that would require the deal to be formally renewed every five years.

The proposed import tax was seen as an additional pressure point in the negotiations, with Mexico and Canada already scheduled to lose their exemption from Trump’s metals tariffs in little more than a week.

“This has been discussed for some time, which makes me suspect that this is being leaked to put pressure on Mexico during NAFTA and on other parties seeking steel and aluminum exemptions,” said attorney Dan Ujczo of Dickinson Wright.

Initial reaction to the idea of an import tax on cars based on national security needs was unfriendly, with one veteran trade lawyer saying it would prompt “pant-wetting laughter — followed by retaliation” among U.S. trading partners.

Mexico in the past has threatened to retaliate against U.S. trade actions by curtailing purchases of American farm products. Mexicans last year purchased almost $19 billion of American corn, dairy and soybean products.

The provisions of a 1962 trade law, known as Section 232, allow the president to restrict imports that threaten “to impair the national security.”

Under the law, the Commerce Department conducts a months-long review and reports its conclusions to the president. He then determines the final tariff figure, if any.

William Reinsch, a former Clinton administration trade official, said the proposal broke with traditional legal interpretations and would disrupt industry supply chains and probably lead to job losses in the United States and elsewhere.

“Arguing that passenger cars are a national security issue doesn’t pass the laugh test,” he said. “We don’t have a shortage; our companies are not currently in trouble; and there are plenty of alternative sources from reliable allied suppliers. Pursuing that case would make a mockery of the provision.”

A vehicles tariff also would hurt U.S. automakers with operations in Mexico and Canada and other places. The United States imported $192 billion in passenger vehicles last year, with Mexico being the leading source, followed by Canada, Japan and Germany.
An industry group representing several foreign carmakers said the domestic industry did not need protection from competition.
“If these reports are true, it’s a bad day for American consumers,” said John Bozzella, chief executive of Global Automakers, which represents several foreign carmakers.

“To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America.”

The auto industry has been a focus of the president’s. He has complained about the difficulties American carmakers face selling their products abroad, raising the subject with Asian and European allies.

In March, he threatened to hit European carmakers with tariffs if the European Union did not lower barriers to U.S. vehicles. The EU adds 10% to the cost of imported American models, while the United States imposes a levy of 2.5% on most imported cars and 25% on most pickups.

German officials have grown frustrated trying to convince Trump that Germans don’t want to buy from American companies, which specialize in large sport-utility vehicles rather than smaller cars more suited to European lifestyles.

Trump has obsessed over German cars above all others, according to a senior White House official familiar with the talks. Though the president is now driven in an armored black Cadillac limousine known as “the beast,” he has owned various foreign models, including Maybach, Rolls Royce, Mercedes-Benz and McLaren.

The president appears to have previewed the internal debate with an early-morning tweet: “There will be big news coming soon for our great American ­Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!”
The proposal was first reported by the Wall Street Journal.

Efforts to reach agreement on a revamped North American Free Trade Agreement by Thursday might be a bit overly optimistic.

U.S. House Speaker Paul Ryan said last week that the details of a deal would need to get to Congress by then for a vote to happen this year, but it’s not clear that time frame is realistic.

Experts note that the negotiators for the United States, Canada and Mexico remain far apart on key issues, particularly involving the automotive industry.

The logistics become even more complicated because, as Bloomberg reported, those officials are not scheduled to meet in person this week. The effect is to add uncertainty to one of President Donald Trump’s key pledges — to remake NAFTA.

During an automotive roundtable with automakers at the White House last week, Trump mentioned the effort to renegotiate the deal, saying, according to a copy of his remarks, that “NAFTA has been a horrible, horrible disaster for this country. And we’ll see if we can make it reasonable.” 

But the stakes are high, with estimates that tens of thousands of U.S. automotive-related jobs could be at risk if NAFTA implodes.

Jeff Schott, a senior fellow at the Peterson Institute for International Economics, however, said getting a deal done quickly is not the most important consideration.

“There’s an interest in having the current Congress vote on it because there’s uncertainty about the composition of the next Congress and the leadership of the next Congress, but you know, when push comes to shove, what’s important is you get the right agreement … and if that means you have to work a little more, then you take your chances with the Congress,” Schott said. “If it’s a better agreement, you should have a better chance of getting congressional approval.”

Schott said it appears Ryan and others are trying “to just basically give a kick in the pants to the negotiators to try to get them to accept some of the U.S. proposals.”

Ryan’s push for a deal this week relies on a timeline laid out under so-called fast-track trade requirements, which allow for a vote in Congress without amendments.

One of the more contentious issues in the negotiations involves a U.S. push to require a certain amount of vehicle content be made by higher-wage workers, which effectively excludes Mexico.

But Kristin Dziczek, director of the Industry, Labor and Economics Group at the Center for Automotive Research in Ann Arbor, said every automotive-producing region has a low-cost area. It’s part of being competitive. It’s also what makes vehicles affordable in this country.

“Our exports would be much more expensive if we didn’t have that low-cost content. Our consumer prices will be much more expensive,” she said.

Dziczek said NAFTA, which has been in place since 1994, does need to be updated. Vehicle content now includes extensive use of software and electronics, areas that have changed substantially in the ensuing years, for instance. But a deal that simply makes it “more difficult to make things in Mexico does not necessarily bring manufacturing back to the U.S.”

Several Mexican banks experienced large cash withdrawals in recent weeks after possible cyber attackers infiltrated some financial institutions, triggering unauthorized money transfers, the central bank said in an interview with Bloomberg.

Banco de Mexico has zeroed in on five financial institutions whose external connection to the central bank’s electronic payment system was compromised, Lorenza Martinez, the central bank’s head of operations said. The vulnerability let money be illegally siphoned from “fake accounts” at those firms and led to several large cash withdrawals from other banks, she said.

The five banks and brokers are working with Mexico’s attorney general to determine whether organized criminals helped orchestrate a possible attack, but Banxico is not involved in those investigations, Martinez said. She declined to name the affected companies and said it’s too early to tell how many actors are behind the incidents. A representative for the attorney general didn’t immediately comment to a request made outside of normal business hours.

It’s been two weeks since the monetary authority asked some lenders to connect to its payment transfer network using a back-up scheme after a suspected cyber attack disrupted some transfers. The measures have caused slowness in transfers for many consumers. Now, more than 20 Mexican financial institutions have enacted back-up plans.

Bloomberg reported last week that Grupo Financiero Banorte, Banco del Bajio SA and Banco del Ejercito were banks that had been directly targeted in the suspected cyber attack.
The payment system, known as the SPEI, was established in 2004 and lets users electronically transfer money between deposit accounts through a private, encrypted network operated by Mexico’s central bank.

While vulnerabilities were discovered at the end of last month, at least one bank experienced an incident as recently as this week, Martinez said. Some of the cash was withdrawn from accounts that had just recently been opened, she said.

The central bank is also probing whether the affected banks and brokerages were complying with security regulations and will ask banks to undergo more frequent stress tests in the future to ensure they can more quickly connect to the SPEI through its back-up network the next time there’s an attack.

WASHINGTON (Reuters) – Top-level talks to update the North American Free Trade Agreement made little headway on Wednesday as the United States and Mexico sought to settle differences over the key issue of automobiles, three well-placed sources said.

With time fast running out to reach a deal, the two NAFTA members are discussing a U.S. demand that a certain percentage of auto production happen in higher-wage areas of the region, a clear jab at lower-cost Mexico, said the sources, who requested anonymity given the sensitivity of the situation.

The two nations are also discussing a U.S. demand to boost the North American content of vehicles.

“Until that is settled one way or another, there is not much chance of broad progress,” said one of the sources.

The future of the North American auto industry in a renewed NAFTA is one of the toughest issues facing U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo.

Freeland met Lighthizer on Wednesday and deflected questions about the slow pace of the talks, saying Canada would take the time needed to get a good deal.

“We’ve been having productive conversations this week,” she told reporters.

Lighthizer says there are only weeks left to reach an agreement before negotiators start running into political challenges caused by a Mexican presidential election on July 1 and mid-term elections in the United States in November.

“We are still engaged. We are trying to really make sure we can ensure progress,” Guajardo told reporters.

The three ministers, who together are in charge of the talks, have not all met together since convening in Washington on Monday and officials said they were not aware of any scheduled trilateral gatherings this week.

“We are meeting as we need to meet,” said Freeland.

Mexico has launched a counterproposal to U.S. demands to toughen automotive industry content rules and boost wages. [L1N1SF0XQ]

U.S. President Donald Trump, who blames NAFTA for job losses in the manufacturing sector, has frequently threatened to walk away from the 1994 pact unless major changes are made.

Many other major issues crucial to a deal are still unresolved, including U.S. demands for a five-year sunset clause, and elimination of settlement panels for trade disputes.

The chapter on intellectual property, seen by some as less-problematic, is also far from resolved.

A biopharmaceuticals official said that the sector was pressing Lighthizer to insist on the 12-year period of patent and data exclusivity enshrined in U.S. law, while Canada was pushing for eight years.