Global automakers participating in the review of the United States-Mexico-Canada Agreement (USMCA) have delivered a coordinated message to US trade authorities: while they continue to support the trade pact, they warn that its automotive rules of origin are increasing production costs across North America and could ultimately translate into higher vehicle prices. These positions were detailed in letters sent to the Office of the United States Trade Representative (USTR) by Volkswagen, Nissan, General Motors, and Toyota, according to documents obtained by MILENIO.
The automakers stressed that the USMCA’s automotive rules of origin are the most restrictive of any trade agreement currently in force. While acknowledging that the pact has encouraged investment and strengthened regional integration, they argued that compliance requirements have driven higher manufacturing costs since the agreement entered into force in 2020. According to the companies, these cost pressures affect supply chains, production planning, and the long-term competitiveness of the North American automotive sector.
Volkswagen said the USMCA’s rules of origin “have increased costs for regional consumers of both new and used vehicles.” The automaker added that the requirements have “slightly reduced employment, production, income, capital spending, inventories, and profits of US light-vehicle producers.” Volkswagen noted that most supply-chain adjustments made to comply with the rules have resulted in higher production costs. Despite these impacts, the company said it has invested more than US$10 billion in the United States since 2018 to meet the agreement’s requirements.
Nissan also cautioned against tightening the rules further as part of the review process, warning that additional restrictions could harm the economies of Mexico, the United States, and Canada. “Creating even stricter rules could put the region’s position as a leading manufacturing hub at risk,” the company wrote, adding that “maintaining these requirements as they are is essential to preserve competitiveness and regional stability.” Nissan emphasized that tariff-free access under the agreement allows automakers to offer affordable vehicles in the US market across a broad range of models. The company reported investments of US$15.7 billion in the United States from 2020.
General Motors echoed concerns about regulatory rigidity, describing the USMCA rules of origin as the strictest worldwide. GM said it has invested more than US$60 billion in the United States to align its operations with the agreement. The automaker noted that it uses “a considerable amount of US-sourced propulsion systems in vehicles assembled in Mexico to ensure compliance.” GM characterized the rules as “highly effective and relevant,” arguing that ambitious thresholds have helped drive domestic investment, even as they increase operational complexity.
Toyota focused on the importance of regulatory certainty, saying stability under the USMCA supports continued growth in the US automotive sector. The company reported investments of US$25 billion in the United States between 2018 and 2025, US$28 billion in local procurement, and an additional US$10 billion allocated to new projects. “The certainty and stability of the USMCA allow continuous growth in the US automotive sector, while also supporting leading exports of US-built Toyota vehicles to Mexico,” wrote Stephen Ciccone, Toyota’s vice president of government affairs. Toyota operates 11 plants in the United States, two in Mexico, and one in Canada, and requested that any changes to the rules of origin include sufficient transition periods and phased implementation.
Labor groups have taken a different view. The United Automobile Workers (UAW) said the automotive trade imbalance worsened under the USMCA. According to the union, the U.S. trade deficit with Mexico increased nearly 75% from 2019 to reach US$172 billion, while the automotive trade deficit rose 34% between 2018 and 2023. “Under the USMCA, the automotive trade imbalance has only worsened,” the UAW said, adding that current rules have not reduced reliance on offshore production. The union called for stricter enforcement to ensure goods are produced by workers earning fair wages using North American-made equipment.
In November, Mexico’s National Auto Parts Industry Association (INA) urged US authorities not to modify the automotive rules of origin, arguing that the provisions remain in a transition phase. In a letter to US Trade Representative Jamieson Greer, INA Executive President Francisco González said “the full effects of the USMCA are still unfolding” and that changes would be premature more than five years after the agreement took effect in July 2020.
González outlined three implementation stages that remain underway. He noted that regional value content requirements for heavy trucks currently stand at 64% and are scheduled to rise to 70% on July 1, 2027, a shift expected to support regional production of heavy-vehicle components. He also cited the requirement that 70% of steel purchased by automakers be melted and poured in North America by the same date, reinforcing regional steel supply chains.
The third stage involves the conclusion in 2025 of Alternative Transition Regimes for light-vehicle manufacturers. González said the effects of these changes will become clearer as supply chains consolidate around specific vehicle programs. He referenced a 2025 report by the United States International Trade Commission projecting that the economic and industrial impacts of the rules will intensify over time. González added that US auto parts imports totaled US$187 billion in 2024, with Mexico accounting for 42.7%.
Mexican automotive industry leaders said they have been preparing for the USMCA review since tariffs imposed during the previous Trump administration disrupted trade flows and increased costs across the sector. With the review scheduled to begin in September, companies expect the agreement to be central to Mexico’s ability to remain competitive amid rising global tariffs and more protectionist trade policies. Executives said the outcome will influence future investment decisions and supply-chain strategies across North America.
Uncertainty has increased following Donald Trump’s return to the White House and signals of a shift toward more unilateral trade measures. “The environment is changing, so we had already identified these issues, but we still do not know how we will arrive at the review or what position the United States will take,” said Odracir Barquera, president, Mexican Automotive Industry Association (AMIA). He said the US government is still refining its tariff strategy, with certification of origin becoming a priority and requiring exporters to demonstrate more precisely that goods are produced within the region.
Industry groups have also warned against a shift toward bilateral agreements. AMIA said trilateral cooperation under NAFTA and now the USMCA has benefited the three countries for more than 30 years, cautioning that bilateral negotiations could increase uncertainty, complicate compliance with rules of origin, and disrupt investment planning. The association warned that proposals to further raise regional value content requirements could “put at risk the advances in value-chain integration and joint production capacity.”
