U.S. trade commission launches review of CUSMA automotive rules of origin

A Lexus NX300 is shown in the Visitor Centre at the Toyota Motor Manufacturing Canada's plant in Cambridge Ont. The Canadian Press/ Geoff Robins

WASHINGTON — The U.S. International Trade Commission has initiated an investigation into the automotive rules of origin under the Canada-U.S.-Mexico agreement (CUSMA) the commission said in a statement on Thursday.

The probe will examine the “impact on the U.S. economy, effect on U.S. competitiveness, and relevancy considering recent technology changes,” the statement said.

The rules of origin under CUSMA boosted the regional value content requirements in order for manufacturers building cars in any of the three countries to qualify for free-trade status. This required North American manufacturers to source more inputs from within the CUSMA region, fundamentally altering their supply chains.

The rules require 75 per cent North American content for manufacturers to get duty-free access to the U.S. market, and require 40 per cent of a passenger car’s content to be manufactured in the U.S. or Canada, based on a list of “core parts” including engines, transmissions, body panels and chassis components. The threshold for pickup trucks is 45 per cent.

The ITC plans to hold a public hearing later this year and will issue the report by July 2027.

CUSMA is the modern, trilateral free-trade agreement that took effect in 2020, replacing the 1994 North American Free Trade Agreement.

USMCA has shielded Mexico and Canada from the bulk of U.S. President Donald Trump’s tariffs, as goods that comply with its rules of origin can enter the U.S. duty-free.

The U.S. Trade Representative’s Office said last month that possible reforms for CUSMA include stronger rules of origin for industrial goods.

Major automakers including General Motors, Tesla, Toyota and Ford have urged the Trump administration to extend CUSMA, which they call crucial to American auto production.

Stellantis said vehicles made outside North America should follow rules on component origin to “mirror or effectively match those imposed by the CUSMA” or the Trump administration should drop tariffs on Mexican and Canadian CUSMA-compliant passenger vehicles.

The automaker added that under 15 per cent tariffs with Japan, U.S. vehicles complying with North American content rules “will continue to lose market share to Asian imports, to the detriment of American automotive workers.”

(Reporting by David Shepardson in Washington and Ryan Patrick Jones in Toronto; Editing by Daphne Psaledakis and Matthew Lewis)