The U.S. government, which announced on July 1 that it had declined to renew the United States-Mexico-Canada-Agreement (USMCA) in its current form, is seeking stronger automotive sector rules of origin (ROOs) in the North American free trade pact.
In a report submitted to U.S. Congress this month, U.S. Trade Representative Jamieson Greer stated that his office, the USTR, “intends to examine carefully the USMCA’s automotive rules of origin to identify areas where stronger rules can directly benefit U.S. manufacturers and workers.”
In the foreword of the same report — titled “Report to Congress on the Operation of the United States-Mexico-Canada Agreement with respect to Trade in Automotive Goods” — Greer said that “the automotive industry remains a significant contributor to the U.S. and North American economies” and “the USMCA has had a positive impact on the global competitiveness of the regional auto industry.”
“… Yet, the United States has run a persistent, substantial, and growing trade deficit in autos and parts with Mexico for over 30 years,” the U.S. trade representative stated.
“In 2024, that deficit peaked at [US] $138.2 billion. In recent years, analysis indicates that the share of U.S. content within Mexico’s automotive exports to the United States has been declining, while the share of Chinese or other Asian content in those goods has been increasing.”
In the July 1 report, the USTR stated that the North American automotive industry “has faced external supply chain shocks, increased competitive pressures from China, and evolving U.S. trade policy.
“Further, evidence shows that U.S. content in vehicles produced in Mexico and Canada is declining, while automotive trade deficit with Mexico remains persistently large. The 2026 USMCA Joint Review will provide the United States the opportunity to assess and strengthen the USMCA automotive ROOs to incentivize the use of additional U.S. and North American content,” the USTR said.
“… In 2017, industry estimated 85 percent of the auto parts content for vehicles built in Canada originated in the United States, and more than 60 percent of the auto parts content of vehicles assembled in Mexico originated in the United States. But in 2024, industry reported that the estimated U.S.-origin content of vehicles built in Canada and Mexico dropped to 50 and 35 percent, respectively,” Greer’s office stated.
In an article published on Wednesday under the headline “U.S. insists on strengthening USMCA rules of origin,” the newspaper El Economista wrote that the USTR was seeking to bolster automotive ROOs in the three-way trade pact even though the rules are already “the strictest of any trade agreement in the world.”
In its report, the USTR noted that the USMCA “raised regional value content (RVC) requirements to 75 percent for passenger vehicles and light trucks, compared to 62.5 percent under the NAFTA,” the North American Free Trade Agreement that was superseded by the USMCA in 2020.
In accordance with the USMCA, clearing the 75% RVC threshold is one necessary condition for the tariff-free trade of vehicles within North America. However, U.S. President Donald Trump — who is determined to protect and grow the U.S. auto industry — last year imposed 25% tariffs on vehicles made in Mexico and Canada. The U.S. content in those vehicles — but not regional content — is exempt from the tariff, lowering the effective duty for most cars exported to the U.S. from Mexico.
Despite the United States’ decision not to extend the USMCA until 2042, the free trade pact remains in effect.
However, it is now set to be reviewed on an annual basis until 2036, although the three signatories can decide at any time to extend it for an additional 16 years.
Mexico-US trade talks continue in CDMX
The focus on possible changes to automotive ROOs in the USMCA comes as Mexican and U.S. officials engage in USMCA review talks in Mexico City. Mexico’s top USMCA negotiator, Economy Secretary Marcelo Ebrard, is already participating in the bilateral discussions, which began Monday, and Greer is set to join them.
“Ambassador Jamieson Greer will travel to Mexico from Wednesday, July 22, to Friday, July 24, to continue bilateral discussions related to the Joint Review of USMCA,” the USTR said in a statement last week.
“During the bilateral meetings, Ambassador Greer and Secretary Ebrard will discuss a range of topics including steel and aluminum and derivative products, automobiles, economic security, labor, agriculture, and electronic payment services,” the USTR said, noting also that Greer will meet with President Claudia Sheinbaum at the National Palace. That meeting is scheduled for this Thursday.
One of Mexico’s main aims in its negotiations with the United States is to secure the reduction — if not the elimination — of U.S. tariffs that currently apply to Mexican vehicles, steel and aluminum. Among the measures the Mexican government has taken that could help it secure concessions from its northern neighbor is the imposition on Jan. 1 of new and higher tariffs on imports from China and other countries with which it doesn’t have free trade agreements. The government reported on Monday that the new tariffs approved by Congress in December 2025 had reduced imports across 1,463 product categories by 23.2% between January and May. The most impacted country is China.
Segundo día de trabajos con el equipo de USTR , vamos avanzando. pic.twitter.com/pHKvZp6olF
— Marcelo Ebrard C. (@m_ebrard) July 22, 2026
Underscoring the United States’ desire to strengthen automotive ROOs in the USMCA, Greer said on Wednesday that doing so was a “key objective,” according to reporting by the news agency Reuters.
However, the U.S. trade representative, who appeared before the U.S. Senate Finance Committee in Washington, D.C., before departing for Mexico, said that the resolution of the automotive ROOs issue would “take a little more time” and involve discussions with U.S. Congress “in the following year.”
However, Greer said he hoped to strike some interim trade agreements with Mexico and Canada this year, according to Reuters.
“We are moving with all due speed on this,” he said.
Reuters reported that Greer “did not specify what separate ‘potential interim arrangements’” with Mexico and Canada “would look like, but said he wanted to have options for Trump, Sheinbaum and Canadian Prime Minister Mark Carney to consider by the end of this year.”
Sheinbaum said last Thursday that at this week’s talks with the U.S., Mexico would be aiming to “reach some agreements that give us greater stability in the coming years.”
She has stressed that “at any time,” Mexico, the United States and Canada can agree to extend the USMCA for 16 more years, something that the Mexican and Canadian governments wanted to do this month but which the Trump administration rejected.
Mexico and the United States are each other’s largest trade partners, while Canada is the second-largest market for Mexican exports. Most trade between Mexico and the United States occurs tariff-free under the USMCA, which governs North American trade worth around $2 trillion annually.
With reports from El Economista and Reuters
