USMCA

As negotiations surrounding the future of the United States-Mexico-Canada Agreement (USMCA) continue, the strength of the agreement remains critical to the competitiveness of the North American auto industry. Autos Drive America and six other leading auto industry associations have joined together to support the agreement and highlight its importance to U.S. auto manufacturing.

A strong, trilateral USMCA provides the foundation for an integrated North American auto market; supporting nearly 11 million American jobs, driving hundreds of billions of dollars in investment for U.S. manufacturing, and helping keep vehicles affordable for American consumers. At the same time, the industry faces growing competition from China, whose rapidly expanding auto exports and excess production capacity threaten manufacturers and workers around the world. Maintaining a strong North American market is critical to ensuring the United States can compete globally.

The auto industry has come together to highlight the importance of preserving USMCA and allowing its provisions to deliver the benefits they were designed to provide. Read our coalition document to learn more about USMCA’s role in strengthening U.S. auto manufacturing, supporting American jobs, and keeping the North American auto industry competitive.

‘Rules of Origin’ (ROO) dictate what percentage of a vehicle and its parts (by value) must be made in North America to qualify for duty-free treatment. For a vehicle to be imported duty-free, the USMCA says a certain high percentage of its parts must be made within the three member countries. This is designed to encourage companies to keep manufacturing jobs in North America.

The USMCA contains the most complex and stringent ROOs of any trade agreement ever negotiated:

• Higher Regional Value Content (RVC) Requirements: NAFTA stipulated that vehicles only needed 62.5% of the vehicle’s value to be made in North America to receive preferential treatment. The USMCA raised this requirement to 75% of a vehicle’s value.
• Labor Value Content (LVC): USMCA requires that 40% of a vehicle’s value must be produced by workers earning at least $16 per hour, encouraging higher wages in all three countries.
• Steel and Aluminum Requirements: USMCA requires at least 70% of a vehicle manufacturer’s steel and aluminum purchases to originate in North America.
  • And by July 2027, steel used in automotive production must be melted and poured in North America.

• Maintain USMCA’s Trilateral Partnership, which is essential to the success of the U.S. automotive industry and its competitiveness against China and other regions.
• Refrain from adding new product specific rules that may result in higher costs and lower compliance.
• Return to preferential treatment for qualifying goods.