The US demand for 50% US-made automotive content has stalled USMCA renegotiations, with Mexico refusing even a 1% country-specific requirement ahead of September talks in Washington.
The US and Mexico will meet for a fourth negotiating round in early September 2026 to work through disagreements on revamping the 26-year-old North American trade agreement (USMCA).
US Trade Representative (USTR) Jamieson Greer held talks this week with Mexican President Claudia Sheinbaum and Economy Minister Marcelo Ebrard, focusing on vehicles, steel, aluminium, labour standards, and agricultural trade across the bloc’s USD 1.6 trillion annual commerce.
The auto content standoff
The negotiations hinge on a sharp disagreement over vehicle manufacturing rules. The US is pushing for 50% of content in cars to be US-made to qualify for preferential tariff treatment. Mexico has flatly rejected the demand, with negotiators refusing to accept even a 1% US-specific requirement, arguing it creates a precedent for further demands down the line.
The current pact requires 75% North American content overall, with 40% of that produced by workers earning at least USD 16 per hour—a wage floor met only in the US and Canada.
Notably, the agreement doesn’t mandate that any fixed share originate from a single country. Japan, South Korea, and the EU face a 15% tariff on US auto exports with zero regional content requirements, giving those competitors a significant cost edge over Mexican factories.
Mexico’s counterplay and the tariff trap
Mexico wants the Trump administration to first reduce Section 232 national security tariffs: 25% on autos and 50% on steel and aluminium. Trump has shown no appetite for rolling back those levies. The US has asked Mexico to propose alternative ways to meet Trump’s goal of shifting more auto production northward and cutting the US trade deficit with Mexico.
On 1 July 2026, President Donald Trump declined to extend the USMCA, triggering a ten-year wind-down clock unless negotiators reach agreement.
Greer told Senate lawmakers he aims to finalise interim trade deals this year while punting harder USMCA changes—auto content, labour, environmental rules—to 2027.
Earlier, the US and Mexico began formal negotiations to revise the USMCA, with the US seeking stricter regional content requirements, including new rules for automotive components. The first two rounds of negotiations were held in Washington and Mexico City.
