The trilateral United States-Mexico-Canada Agreement (USMCA), negotiated by Donald Trump in 2019, could be facing its demise following his announcement this week that a 25 percent tariff on all vehicles imported into the United States will go into effect on April 2.
The only exemption for cars made in Mexico and Canada will be for the U.S. content in each vehicle—a clear violation of the USMCA, which stipulates that vehicles with 75 percent North American content are tariff-free. Mexico and Canada are the top two U.S. trading partners for both finished vehicles and car parts.
Speaking on March 27, President Claudia Sheinbaum did not rule out the possibility of Trump changing his mind: “There is still room for negotiation,” she told reporters. She added that she would not announce Mexico’s response, or any potential reciprocal tariffs, until April 3.
If Sheinbaum fails to secure an exemption, these tariffs could have a devastating impact on Mexico’s economy—potentially plunging the country into recession. Mexico is the primary source of new auto imports to the U.S., accounting for nearly 25 percent of the total. Eight out of ten vehicles manufactured in Mexico are exported to the United States.
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