United States May Push for Higher Share of Auto Parts in USMCA Talks, Could Propose '50% U.S.-Made' Requirement

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[Financial News] There are growing expectations that the Donald Trump administration will demand stricter rules of origin for U.S.-made parts in negotiations to revise the United States–Mexico–Canada Agreement (USMCA).
\r\nOn the 29th (local time), foreign media reported that Trump’s negotiating team plans to propose raising the share of U.S.-made parts and materials to more than 50% in the rules of origin for finished vehicles ahead of the USMCA revision talks.
The USMCA requires more than 75% of auto parts to be sourced from North America, but it does not set any requirement for the share of U.S.-made parts.
Some observers say the Trump administration could also propose raising the current North American parts requirement of more than 75%.
The USMCA was signed by the United States, Mexico and Canada in 2018 during Trump’s first administration to replace the North American Free Trade Agreement (NAFTA), and it took effect in 2020. Under a sunset clause, the three countries must review whether to extend the pact every six years, and a decision on an extension is due in July. Canada, however, is not taking part in the current talks.
If the rules of origin are revised to increase reliance on U.S.-made parts, the move is expected to deal a significant blow to South Korea’s automakers, including Hyundai Motor Company.
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jisseo@fnnews.com Seo Min-ji Reporter