By David Shepardson
WASHINGTON, Feb 19 (Reuters) – The U.S. International Trade Commission has launched an investigation into automotive rules of origin under the U.S.-Mexico-Canada trade deal, the commission said in a statement on Thursday.
The investigation will examine “the impact on the U.S. economy, the effect on U.S. competitiveness, and the relevance considering recent technological changes,” according to the statement.
The rules of origin under the USMCA increased regional value content requirements for manufacturers that build cars in any of the three countries to qualify for free trade status. This forced North American manufacturers to source more inputs within the USMCA region, fundamentally altering their supply chains.
The rules require 75% North American content for manufacturers to gain duty-free access to the US market, and require 40% of a passenger car’s content to be made in the US or Canada, based on a list of “core parts” that include engines, transmissions, body panels and chassis components. The threshold for pickup trucks is 45%.
The ITC plans to hold a public hearing later this year and will issue the report in July 2027.
The USMCA is the modern trilateral free trade agreement that came into force in 2020 and replaced the 1994 North American Free Trade Agreement.
The USMCA has protected Mexico and Canada from most of President Donald Trump’s tariffs, as goods that meet its rules of origin can enter the United States tariff-free.
The Office of the U.S. Trade Representative said last month that possible reforms to the USMCA include stricter rules of origin for “industrial goods.”
Major automakers, including General Motors, Tesla, Toyota and Ford, have urged the Trump administration to extend the USMCA, which they see as crucial to American auto production.
Stellantis said vehicles manufactured outside North America should follow rules on the origin of components to “effectively mirror or match those imposed by the USMCA” or the Trump administration should eliminate tariffs on USMCA-compliant Mexican and Canadian passenger vehicles.
The automaker added that under the 15% tariffs with Japan, U.S. vehicles that comply with North American content rules “will continue to lose market share to Asian imports, to the detriment of American auto workers.”
(Reporting by David Shepardson in Washington and Ryan Patrick Jones in Toronto; Editing by Daphne Psaledakis and Matthew Lewis)