The United States is set to impose a 25% duty on global automotive imports, sparking concerns that President Donald Trump will not honor commitments made to Canada and Mexico in 2018. The two countries won annual import quotas of 2.6 million cars and unlimited truck imports, as well as duty-free imports for parts valued at $108 billion for Mexico and $34.2 billion for Canada.
However, the White House has dismissed these protections, stating that they will deduct the value of U.S.-sourced content from tariffs on vehicles and parts. This means that auto parts imports from Canada and Mexico will remain free of duties until a process is established to determine U.S. content values.
The Canadian government has confirmed its commitment to honoring the 2018 agreements but warned it would impose retaliatory measures if the U.S. fails to uphold them. The Mexican Economy Ministry’s undersecretary, Luis Rosendo Gutierrez, stated that Mexico will evaluate its options carefully before taking action.
Industry experts and former trade envoy Dan Ujczo say that these protections were crucial for allowing some growth in Mexican and Canadian production, which would still exceed U.S. imports from the two countries. The Trump administration’s decision to revive a 2019 investigation finding on auto tariffs has raised concerns about the implications for the auto industry.
As USMCA negotiations come to a close, it remains unclear whether the U.S. will uphold its commitments made in 2018. With no clear resolution in sight, the future of trade between Canada and Mexico hangs in the balance.
Source: https://www.reuters.com/world/us/no-sign-trump-will-honor-us-auto-tariff-protections-won-by-canada-mexico-2018-2025-03-29