U.S. and Mexican negotiators began formal talks on Thursday to revamp the North American trade deal, with Washington demanding stricter regional rules of origin, including a U.S.-specific minimum level of content for cars and trucks built in Mexico.
The proposed texts would modify the U.S.-Mexico-Canada Agreement (USMCA). The specific percentage of U.S. automotive content sought was not immediately available, but the shift is significant from existing requirements.
USMCA currently requires 75% of a vehicle's value to be sourced from North America, with a separate requirement that 40% of passenger car content come from higher-wage facilities in the U.S. or Canada.
The U.S. and Mexico are excluding Canada from the current talks, with plans for three bilateral negotiating rounds through late July. U.S. Trade Representative Jamieson Greer said he wants to strengthen rules of origin to boost U.S. manufacturing.
Talks are complicated by Trump administration's global tariffs of 25% on autos and 50% on steel, effectively ending duty-free North American trade. Greer said Washington will maintain at least some tariffs on Mexican and Canadian industrial goods.
Lawyer Dan Ujczo is optimistic that the three countries can overcome differences to modify and extend the trade pact. Meanwhile, steel tube maker CEO Barry Zekelman said U.S. negotiators will push for a requirement that Mexican and Canadian steel be melted and poured in North America to receive preferential tariff treatment.
