U.S. and Mexico Discuss Higher Regional Content Rules for Vehicles Under Trade Pact

U.S. and Mexican trade officials met in Mexico City to discuss raising the required percentage of regionally produced content in North American-built vehicles to 82 percent, with half of that value produced in the United States. The proposal emerged during negotiations to revise the USMCA and would replace the current 75 percent regional content threshold. Canada was not present at the meeting.

Under the current agreement, 40 percent of the value of core parts in North American passenger vehicles must come from high-wage jurisdictions, with a 45 percent threshold for pick-up trucks. Officials told Reuters that the U.S. Trade Representative will negotiate with Mexico and later present Canada with a take-it-or-leave-it offer.

The USMCA, which replaced the North American Free Trade Agreement in 2020, underpins nearly $1.6 trillion in annual trilateral trade. Last year the United States imposed 25 percent tariffs on Canadian and Mexican vehicles and components, along with 50 percent duties on steel, aluminum, and copper.

and Trade Moves Statistics

Canada reported that the Canadian economy contracted at an annualized rate of 0.1 percent in the first quarter, following a 1 percent contraction in the fourth quarter of last year. On a quarterly basis, first-quarter GDP was unchanged. Canada has been expanding trade ties with China, its second-largest trading partner.

During a meeting on Friday, China’s Minister of Foreign Affairs Wang Yi said Canada could exceed its goal of increasing exports to China by 50 percent by 2030 and possibly double them. Canada’s Foreign Minister Anita Anand stated that Canada is focused on growing its economy and diversifying trading relationships.