North America Auto Trade Groups Back USMCA Extension

Major auto trade groups have urged the Trump administration to extend the U.S.-Mexico-Canada Agreement (USMCA), arguing that the deal remains essential for maintaining North America’s competitiveness in vehicle production.

In a letter sent to U.S. Trade Representative Jamieson Greer, seven organisations representing automakers, car dealers, and parts manufacturers said the trade pact supports the United States at a time of growing global competition. Reuters first reported the letter.

The groups stated that extending the agreement “will help ensure that the United States remains a globally competitive production base at a time of rapid technological change and intensifying international competition.”

Industry Push Ahead Of USMCA Review

The appeal comes before a July 1 deadline for a scheduled six-year review of the USMCA. Meanwhile, Mexico and the United States have agreed to begin formal bilateral negotiations during the week of May 25 in Mexico City to address trade issues linked to the agreement.

However, the Office of the U.S. Trade Representative did not immediately comment on the request.

Mexico and Canada have viewed the upcoming negotiations as a possible route to ease the heavy tariffs imposed by President Donald Trump in 2025. Those duties have affected automakers and several other industries that rely heavily on the integrated North American supply chain.

Trade Groups Warn Against Splitting Deal

The industry organisations represent major vehicle manufacturers, including General Motors, Volkswagen, Tesla, Toyota, and Hyundai.

In the letter, the groups warned against breaking the USMCA into separate trade agreements. They argued that such a move would create unnecessary complications for businesses across the region.

According to the letter, dividing the agreement “would introduce unnecessary complexity, increase administrative burden, create divergent regulatory regimes, and undermine the very supply chains the agreement was designed to strengthen.”

The warning reflects growing concerns that changes to the current framework could disrupt manufacturing operations that have developed over decades across the United States, Mexico, and Canada.

Tariff Changes Raise Industry Concerns

Under the USMCA and its predecessor, the North American Free Trade Agreement (NAFTA), the three countries enjoyed more than 30 years of tariff-free trade in automobiles and auto parts.

However, that changed after Trump imposed a 25% tariff last year on global automotive imports under Section 232 of the Trade Expansion Act of 1962, citing national security concerns.

Since then, the administration has negotiated lower tariff arrangements with several trading partners. Japan, the European Union, and South Korea secured agreements setting automotive tariffs at 15%, while Britain received a 10% tariff rate.

As a result, some vehicles imported from those countries now face lower duties than vehicles shipped from Mexico into the United States.

Regional Content Rules Remain Central

The USMCA currently requires roughly 75% of a vehicle’s value to originate within North America. In addition, the agreement mandates specific levels of content from the United States or Canada.

A group representing the Detroit Three automakers said last year that the agreement generates major efficiency benefits and accounts for “tens of billions of dollars in annual savings.”

Industry leaders continue to argue that preserving the existing framework is critical for sustaining investment, production, and jobs throughout the North American automotive sector.

With inputs from Reuters