The United States has opened negotiations with Mexico aimed at requiring that at least 50% of vehicles traded under the USMCA be made in the US. The talks, which began on May 28, represent a fundamental shift from the existing agreement’s approach of treating North America as a single manufacturing bloc.
What the current rules actually say
The USMCA, which replaced NAFTA and took effect in 2020, already tightened automotive content rules significantly. Under NAFTA, vehicles needed 62.5% regional value content to qualify for tariff-free treatment. The USMCA bumped that to 75% for light vehicles, with the full requirement phasing in by July 2023.
On top of that, the agreement introduced labor value content rules. These require that 40% of a passenger vehicle’s content and 45% of a light truck’s content come from workers earning at least $16 per hour. There’s also a mandate that 70% of the steel and aluminum used in vehicles be sourced from North America.
The new proposal goes further by demanding that a substantial chunk of that content specifically originate in the United States, not just anywhere on the continent.
