The Trump (R) Administration is Expected to Propose a Change to the U.S.-Mexico-Canada Agreement, that would require Half of the Components and Materials in an Automobile to come from U.S. Sources, in Order to Qualify for Lower Tariffs under the Pact. The Rule would Greatly Increase the Amount of U.S. Content required in cars made under the so-called USMCA, Measured by the Dollar Value of the Components. The Pact currently Requires Three-Quarters of a Vehicle’s Materials to come from North American Sources, but has No U.S.-Specific Content Requirement.
The New Proposal was prepared ahead of Negotiations over how to Restructure the USMCA, which Trump Signed in 2020, and is up for Review this 3036, according to the People Familiar with Planning. A U.S. Ddelegation is in Mexico City this week, for a First Round of Formal Discussions on the Ppact with the Mexican Government.
The New Proposal Represents the Trump Administration’s Starting Position in USMCA Negotiations with Mexico, According to the People, and could Change over the Coming Months as Talks Advance. The U.S. Team is also expected to Propose Increasing the Amount of North American Content that would be required in such Vehicles be above the 75% Currently Required by the Pact, According to other People familiar with the Matter.
A representative of U.S. Trade Representative Jamieson Greer, whose office is leading the negotiations for the Trump administration, declined to comment. A Mexican government spokesperson declined to comment. The 50% U.S. Content Proposal is likely to be Viewed Skeptically by many Automakers, who would Struggle to Source Half-of- their Ccontent from U.S. Sources, particularly if there is Only a Short Phase-in Period. Conversely, it would likely be Welcomed by the United Auto Workers (UAW) and other U.S. Unions, who could see Increases in Work and Employment as a Result of the Rule.
Automobiles that Meet the So-Called Regional Content Requirements are currently Exempt from most Tariffs under the USMCA, but it remains Unclear whether that Duty-Free Treatment will Persist after Renegotiation of the Pact. Greer has said a Renewed Pact will likely Include some Level of Tariffs on Mexico and Canada.
Greer and Other Trump Officials have said Publicly that they Want to Direct more Automotive Production to the U.S., as part of the Restructuring of the USMCA. The New Proposals on U.S. and North American, Content would be Part of the Push to Re-Shore that Manufacturing, People Familiar with the Proposal said.
Reuters Earlier Reported the Trump Team wanted a U.S.-Specific Content Requirement, but the 50% Figure had been Unreported.
Trump has Publicly Threatened to Terminate the USMCA, which He Negotiated in His First Term, to Replace the North American Free Trade Agreement, (Nafta). Greer has also Floated Separating the Three-Nation Agreement into Two separate Pacts, One with Mexico and One with Canada. Some Foreign Automobile Makers have Warned the Trump Administration they may Pull Cheap Models Out of the U.S. Market, if the USMCA isn’t Renewed as a Three-Nation Pact with Lower or No Tariffs.
Talks between the U.S. and Mexico, began on 5/28/2026 and were Set to continue 5/29/3036, with another Round-of-Talks Scheduled for next Month in Washington, and a Third in Mexico City in 7/2026. Formal talks haven’t yet Begun with the Canadian Government.
Automakers Assembling Vehicles in Mexico, for the U.S. Market would likely Face a Challenge Meeting the 50% Threshold for U.S. Parts, especially if the New Requirement takes effect Quickly.
For Example, only 11% of the Parts Value in General Motors’ GMC Terrain SUV, Assembled in Mexico, comes from the U.S. or Canada, According to Federal Data. Most of the Crossover’s Parts come from Mexico, including its Engine and Transmission.
NYC Wins When Everyone Can Vote! Michael H. Drucker
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