Canada sidelined in USMCA renegotiations as domestic economy dips

The United States proposes revising USMCA rules to increase the share of regionally produced content in North America-built vehicles to 82 percent, with 50 percent of that value produced in the United States. The proposal emerged during negotiations in Mexico City, where Canada was not present. The change would significantly alter current USMCA requirements, which set 40 percent of core parts value for passenger vehicles in high-wage jurisdictions and 45 percent for pickup trucks, alongside a 75 percent regional content threshold for preferential treatment. US Trade Representative Jamieson Greer would negotiate with Mexico and present Canada with a take-it-or-leave-it offer. The talks occur as the US maintains tariffs on Canadian and Mexican vehicles and components and signals continued tariff levels in any revised pact.

"The administration of United States President Donald Trump wants to increase the percentage of regionally produced content in North American-built vehicles to qualify for preferential treatment under the US-Mexico-Canada Agreement (USMCA) on trade to 82 percent, with 50 percent of that value produced in the US. The new proposal, which was first reported by the Reuters news agency, citing four unnamed sources familiar with the matter, emerged amid negotiations to revise the USMCA in Mexico City. Canada was not present at the negotiations."

"The shift, if accepted, would be a major break from the current USMCA, which requires that 40 percent of the core parts value of North American passenger vehicles be produced in high-wage jurisdictions, effectively the US or Canada. That threshold is now 45 percent for pick-up trucks. Overall, vehicles built in North America currently must have 75 percent regional content to qualify for preferential treatment under the USMCA."

"Auto sector officials told the outlet that US Trade Representative Jamieson Greer will negotiate with Mexico and present Canada with a take-it-or-leave-it proposition. Canada's exclusion from the negotiations for the USMCA, which is up for review in July, comes amid growing tensions between Washington, DC and Ottawa. The USMCA, which was launched in 2020 to replace the decades-old North American Free Trade Agreement, maintained a duty-free trade zone that underpins nearly $1.6 trillion in annual trilateral trade."

"But Trump last year imposed 25 percent tariffs on Canadian and Mexican vehicles and components, with 50 percent duties on steel, aluminium and copper from those countries. Greer has said that he intends to keep some level of tariffs on key Mexican and Canadian goods in the revised trade pact. But the two partners may get some preferential tariff rates. Currently, veh"

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