New North American trade rules to cost automakers USD3 billion in tariff over next decade

The new agreement imposes a 75% regional content requirement, up from 62.5% under NAFTA, along with the mandate to use North American steel and aluminium

The new United States- Mexico-Canada Agreement (USMCA), which is set to replace North American Free Trade Agreement (NAFTA), will cost automakers nearly USD3 billion in tariffs in the United States for cars and parts that will not meet higher regional content requirement over the next decade, Reuters reported citing estimates by the US Congressional Budget Office (CBO). The new agreement imposes a 75% regional content requirement, up from 62.5% under NAFTA, along with the mandate to use North American steel and aluminium. In addition, the new agreement requires 40 to 45% of vehicle content to come from high-wage areas paying more than 16 US dollar per hour, namely in the United States and Canada.