The United States has not requested a 50% U.S. content requirement for cars in the rules of origin of the United States-Mexico-Canada Agreement (USMCA), stated Marcelo Ebrard, Mexico’s Secretary of Economy.
At a press conference in Mexico City on Wednesday, Ebrard said he had learned of two U.S. proposals published in the press. One concerned a 50% U.S. content requirement for cars to qualify for tariff benefits. The other involved increasing regional content in cars from 75% to 82% for the same purpose.
Content Requirement for Cars
“I read about it in an article. But it hasn’t been made official,” Ebrard replied to a reporter, asserting that Jamieson Greer, the White House trade representative, has not officially presented either of these proposals.
A few days ago, Ebrard reiterated in a radio interview that Mexico will not accept a requirement for U.S. content in automobiles under the USMCA’s rules of origin.
At the same press conference, Ebrard defended the integration of the automotive industry into the USMCA. The Secretary of Economy rejected any tariffs that would be disadvantageous to Mexico. He warned that the current restrictions make no economic sense.
Ebrard emphasized that Mexico’s priority is to correct the asymmetries in the U.S. automotive tariffs. Currently, the automotive industries in Mexico and Canada face a 25% tariff subject to strict rules of origin and discounts based on U.S. content. In contrast, imports from Japan, the European Union, or South Korea receive less restrictive treatment with a flat tariff of 15 percent.
The official explained that Mexican vehicles exported to the U.S. market contain up to 60% U.S. components. He cited as an example the assembly of pickup trucks with engines imported from the United States. From his perspective, the trade bloc needs to protect this supply chain from competitors on other continents.
Automotive Rules of Origin
According to press reports, the Trump administration revived the demand for a U.S. content requirement within the USMCA’s automotive rules of origin.
This proposal mirrors the one put forward during the fourth round of the original negotiations by then-U.S. Trade Representative Robert Lighthizer, who demanded 50% U.S. content before backing down in March 2018.
During those negotiations, Lighthizer also pushed for an 85% Regional Value Content (RVC) requirement and full traceability of components; ultimately, the rate was agreed upon at 75%, and mandatory traceability was ruled out.