Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2022 Auto News Canada All-Stars
    • 2022 Canadians To Watch
    • 2022 Diversity Champions
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Dealer Discussions
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
    • EVs Decoded
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Trade and Tariffs
December 08, 2022 05:25 PM

Mexico, Canada win trade dispute with U.S. over car-content rules

The ruling could potentially benefit both consumers and carmakers because it would allow the manufacturers to build more components, and assemble more cars, in Mexico

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    USMCA-Car-MAIN.gif
    AUTOMOTIVE NEWS CANADA ILLUSTRATION

    Mexico and Canada won a trade dispute with the United States over cars shipped across regional borders, potentially giving manufacturers more incentive to make auto parts in those nations.

    The dispute-resolution panel set up under the 2020 US-Mexico-Canada Agreement (USMCA) made a preliminary ruling on Nov. 14, according to people familiar with the decision who declined to be identified because the report hasn't yet been made public. The nations have an opportunity to give feedback on the report before a final version is issued within 30 days.

    Mexico first sought the panel's help in resolving the conflict in January. The dispute focuses on the nations' differences over how to calculate the percentage of a vehicle that comes collectively from the three countries under the USMCA, which replaced the North American Free Trade Agreement, also known as NAFTA.

    The ruling could potentially benefit consumers and carmakers alike because it would allow the manufacturers to build more components — such as high-cost batteries — and assemble more cars in Mexico, where workers' wages are a fraction of their US counterparts, said Sam Fiorani, vice president of global vehicle forecasting and a supply-chain specialist with AutoForecast Solutions LLC in Chester Springs, Pennsylvania.

    LOWER PRICES

    "Providing this amount of wiggle room in the calculations has the potential to lower prices for end-product and increase profitability as automakers seek out lower costs on some components," Fiorani said in an interview. "Instead of lowering prices, the new rules increased the pricing of North American vehicles, as reaching the set domestic-content levels would be very difficult."

    Mexico's economy ministry and the U.S. Trade Representative didn't immediately respond to requests for comment.

    A spokesperson for Canadian Trade Minister Mary Ng declined to comment until after the ruling is published. General Motors Co. and Ford Motor Co, which each have significant operations in Mexico and Canada, said the same.

    Both Mexico and Canada believe the USMCA stipulates that more regionally produced parts should count toward duty-free shipping than the United States wants to allow. Motor vehicles are the top manufactured product traded between the three countries.

    The United States had insisted on a stricter method than its neighbors say they agreed to, in order to tally the origin of core parts including engines in the overall calculation. That makes it harder for plants in Mexico and Canada to meet the new threshold of 75 per cent regional content, up from 62.5 per cent under NAFTA, in order to trade duty-free.

    For example, if a core part uses 75 per cent regional content, and thus qualifies under that requirement for duty-free treatment, Mexico and Canada argued that the USMCA allows them to round the number up to 100 per cent for the purposes of meeting a second, broader requirement for an entire car's overall regional content. The United States, however, didn't want to permit rounding up, making it tougher to reach the duty-free threshold for the overall vehicle.

    Cars are at the heart of the USMCA — with tens of billions of dollars traded each year — and Mexico viewed the United States demand by the Biden administration as an attempt to renegotiate a key aspect of the deal.

    RECOMMENDED FOR YOU
    Canada can’t go toe-to-toe with U.S. incentives in Inflation Reduction Act
    Recommended for You
    Chrystia Freeland
    Canada can’t go toe-to-toe with U.S. incentives in Inflation Reduction Act
    USMCA-Car-MAIN_0.gif
    Canada and Mexico win auto rules trade dispute with U.S.
    DSMA CEO on current mergers & acquisitions outlook
    Sponsored Content: DSMA CEO on current mergers & acquisitions outlook
    Digital Edition
    March 2023 Cover
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes 12 monthly issues – delivered in print to your doorstep, and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2022 Auto News Canada All-Stars
      • 2022 Canadians To Watch
      • 2022 Diversity Champions
      • Best Dealerships To Work For
      • Canada Congress
      • Retail Forum: Dealer Discussions
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
      • EVs Decoded
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS