No sign Trump will honor US auto tariff protections won by Canada, Mexico in 2018
Source: Reuters
March 29, 2025 3:07 PM EDT Updated 3 hours ago
March 29 (Reuters) - Canada and Mexico won protections against potential new U.S. auto tariffs in 2018 as part of the U.S.-Mexico-Canada Agreement on trade, but there is no evidence that President Donald Trump will honor those commitments as he imposes 25% duties on global automotive imports. The side letters to the USMCA trade deal agreed to by Trump's first administration granted both Mexico and Canada a 60-day delay on the imposition of any global auto tariffs as a result of his first-term Section 232 national security investigation into auto imports.
Once that North America-only grace period expired, Canada and Mexico would each get an annual duty-free import quota of 2.6 million passenger vehicles and an unlimited number of light truck imports. The letters, signed by Trump's former U.S. Trade Representative Robert Lighthizer, also granted Mexico a duty-free quota on annual parts imports valued at $108 billion and Canada a $34.2 billion parts quota. The agreements further stipulate that even for automotive products that are non-compliant with USMCA rules of origin, the Section 232 tariffs cannot exceed the tariff rate in effect on August 1, 2018 for the two countries - effectively 2.5%.
If upheld, this would provide relief to some automakers that had been shipping Mexican-built cars to the U.S. at that tariff rate, including BMW (BMWG.DE). Trump revived the 2019 Section 232 investigation findings to impose the 25% tariffs that take effect on April 3, but White House officials made no mention of the 2018 USMCA side-letter promises, subjecting Mexican and Canadian-built vehicles to immediate 25% tariffs. Instead, they said the only carve-out for Mexico and Canada was to deduct the value of any U.S. content from the 25% tariffs on U.S. vehicles and parts.
Auto parts imports from Canada and Mexico will remain on a duty-free basis until the Commerce Department establishes a process for determining U.S. content value, with no specified deadline. A separate issue is whether the deadline for the Section 232 auto tariffs expired in November 2019 under the original report. Trump administration officials are aware of the issue, auto industry lobbyists said.
Read more: https://www.reuters.com/world/us/no-sign-trump-will-honor-us-auto-tariff-protections-won-by-canada-mexico-2018-2025-03-29/
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