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Mexico's proposal would apply U.S. tariffs only to non-North American vehicle content, potentially lowering the effective rate to 5% or 10%
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In ongoing talks over a reworked U.S.-Mexico-Canada Agreement, Mexico has been pressing the U.S. to cut tariffs on automobiles made in North America, according to The Wall Street Journal. Put forward in recent weeks, the plan calls for broadening the share of vehicle content eligible for duty-free status while also cutting the headline tariff rate applied to North American automobiles.
The Mexican plan would have the U.S. levy tariffs solely on the share of a vehicle's value that originates beyond North America, meaning components from Mexico and Canada would receive duty-free status, the Journal reported. The top-line tariff rate would fall from the current 25% to either 5% or 10% for North American vehicles that do not comply with the deal.
