The Trump administration has laid out its demands as negotiations continue over the revision of the United States-Mexico-Canada Agreement (USMCA), and to say they are ambitious would be an understatement. Washington is calling for 82 percent of the value of any vehicle assembled in North America to be produced in the region to qualify for preferential tariff treatment. Half of that value would have to come from American soil.
The regional content threshold for passenger vehicles assembled in North America would rise from 75 percent to 82 percent.
Half would have to come from the United States, and Canadian content would not count toward the total.
Negotiations are taking place between Washington and Mexico City; Ottawa is not at the table.
What makes this particularly insulting is that Canada is not even part of the conversation right now.
What Changes Compared to Current Rules
Presenting the American demands is one thing, but putting them in context matters as much.
The USMCA, in effect since 2020, requires that 40 percent of a passenger vehicle’s “core parts” be produced in high-wage jurisdictions, meaning the United States and Canada. For pickup trucks, that threshold currently sits at 45 percent. The new American demands represent a significant jump, and it remains unclear how the parts’ origin would actually be calculated.
We are firmly in uncertain territory.
Several automakers, who spoke to us off the record, have noted how difficult it is to negotiate with the current American administration, which at times does not fully grasp the complexity of the issues at stake.
Canada is not at the table
Negotiations are currently underway between Washington and Mexico City. According to sources close to the file, U.S. Trade Representative Jamieson Greer could reach a deal with Mexico and then present it to Canada as a done deal. Greer has never clearly committed to whether the USMCA would remain a trilateral agreement or be split into separate bilateral arrangements.
What is certain is that with 25 percent tariffs already in place on vehicles from Canada and Mexico, and 50 percent duties on steel, aluminum, and copper, the pressure to reach a new agreement is mounting. While certain protections contained in the current USMCA remain in force, those safeguards cannot be taken for granted indefinitely. For automakers planning investments years in advance, prolonged uncertainty over North America’s trade framework is becoming a growing concern.
The new local content requirements will only add to the pressure on all parties involved.
