VW plant, Chattanooga may benefit by NAFTA deal, economist says

Our auto assembly base is dependent on northsouth trade.

Chattanooga's Volkswagen plant and the region could gain from a tentative trade deal with Mexico by attracting more supplier part production, a University of Tennessee economist says.

"If you raise production costs in Mexico and move input production to the Chattanooga area and reduce transportation costs, that would be an advantage," said Dr. Matt Murray, assistant director of the Boyd Center for Business and Economic Research at UT.

But, he said, car prices overall in the United States could go up to cover the costs of higher wages and more North American content.

"That may reduce the autos purchased by consumers across North America," Murray said. "That result plays against Tennessee."