The U.S. Automotive Suppliers Association (MEMA) highlighted the high costs of USMCA compliance.
In effect since July 2020, the USMCA—a free trade agreement between Mexico, the United States, and Canada—introduced additional compliance requirements related to documentation, tracking, and reporting. As a result, these changes have impacted exporting companies.
Costs of USMCA Compliance
According to MEMA, these compliance challenges are clearly reflected in the data. On the one hand, suppliers report spending, on average, 77 hours per month on USMCA-related compliance tasks. For Tier 1 suppliers, this figure exceeds 100 hours.
For many of MEMA’s smaller member companies, trade compliance accounts for a significant portion of their workday. This is because they often have only one or two people responsible for managing this work.
Uncertainty Among Automotive Suppliers
MEMA considers it essential to emphasize that the USMCA is still a relatively new agreement. As a result, companies continue to work intensively to meet more stringent requirements, identify and validate new sub-suppliers, and further adjust their global supply chain structures.
Many suppliers have carried out a significant restructuring of their key supply chains to fully comply with the requirements of the USMCA. All of this has taken place against a backdrop marked by changing consumer preferences regarding vehicle propulsion systems, a global pandemic, and a series of macroeconomic factors that have caused instability in the sector.
In some cases, these processes are still ongoing, as it has been necessary to identify, validate, and approve new sub-suppliers and suppliers.
The situation is even more complex for suppliers in the commercial vehicle sector. These players face the challenge of achieving full compliance with regional content requirements (RVC) by July 2027.
According to MEMA, any substantial change would negatively impact our members’ efforts and increase volatility in the industry.
In a recent survey of MEMA members, when asked about the most significant tariff and trade challenge they have faced in the past six months, the most frequent response was uncertainty surrounding trade policy.