Trade Cases
August 26, 2018
NAFTA: U.S and Mexico Make Progress on Auto Rules
Written by Sandy Williams
The United States and Mexico have agreed on changes to the rule of origin for NAFTA automobiles during bilateral discussions. The percentage of North American content for NAFTA autos will be increased from 62.5 percent to 75 percent. In addition, 70 percent of steel, aluminum and glass used in production of autos must be sourced from North America to receive duty-free treatment. The regional value content will be phased in over three years.
Autos manufactured by existing facilities will be subject to a 2.5 percent tariff if they do not conform to the rules of origin. The U.S. is demanding that non-conforming autos be taxed at a higher rate. To do so, however, the U.S. would have to increase its most-favored nation tariff for autos before an increase could be implemented.
