USMCA spares Canada and Mexico from Trump’s potential 25% auto tariffs

If Trump acted on his threat to impose 25% tariffs on global automobiles exported to the United States, subject to a quota regime, auto exports from Canada and Mexico would be largely exempted from this potential threat.

According to a side-letter to the USMCA agreement which will replace NAFTA, the new trade deal will exempt passenger vehicles, pickup trucks and auto parts from Canada and Mexico from the 25% tariffs U.S. President Donald Trump has threatened to impose on global automobiles imported to the United States.

If the Trump was to impose “Section 232” – autos tariffs – citing national security, those coming from Canada and Mexico would each get a tariff-free passenger vehicle quota of 2.6 million passenger vehicles exported to the United States annually. Further Mexico will receive an auto parts quota of $108 billion annually, while Canada will get a parts quota of $32.4 billion annually.

Further, pickup trucks built in both countries will be exempted entirely.

Incidentally, these quotas have been placed much higher than current production volumes for Canada and Mexico which allows for some export growth.

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Categories: Creativity, Economy & Finance, Entrepreneurship, Geopolitics, HR & Organization, Regulations & Legal, Strategy

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