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Trump plans to grant exemption to automakers whose cars comply with the U.S.-Mexico-Canada Agreement
- Trump’s administration is considering granting a one-month delay for tariffs on automakers whose cars meet the 2020 U.S.-Mexico-Canada Agreement’s (USMCA) rules of origin
- However, automakers will have to demonstrate plans to invest in US to remain exempt.
- The USMCA, which replaced the North American Free Trade Agreement (NAFTA) in 2020, increased the regional value content (RVC) requirement to 75% from 62.5%
- To facilitate a smooth transition to these stringent requirements, the USMCA provides an option for automakers to request an Alternative Staging Regime (ASR), allowing up to five years to fully comply with the new rules (compliance dateline is July 2025).
- The White House, however, said the reciprocal tariffs will go into effect in April 02.
- The screenshot below shows the automakers that currently meet the USMCA using ASR.
Assessment
The exemption signals that Trump could consider exempting vehicles produced in North America from the tariffs in an effort to maintain the competitiveness of the region as desired by the Detroit automakers.
@Magaly, what do you think about this development?