Auto tariffs remain a major sticking point in North American trade talks, with U.S. automakers warning that changes to the United States-Mexico-Canada Agreement (USMCA) could cost them billions.
First things first: Canadian and U.S. negotiators spent much of the weekend trying to find common ground on trade, with autos and lumber emerging as the biggest points of contention as Canada seeks to avert punitive tariffs President Trump has threatened to impose by Wednesday, according to The Globe and Mail.
The U.S. has demanded that Canada accept a 15% tariff on auto exports to the U.S., along with a continued exemption for the portion of vehicles containing American content, in exchange for Canada lifting its retaliatory tariffs.
Canadian officials contend that a 15% auto tariff is still too high for the industry to remain viable as profit margins tighten.
One source said that while the tariff rate remains a concern, the bigger question is whether the exemption should apply only to U.S. content or all North American content.
Why it matters: The outcome of the negotiations could directly influence vehicle production costs, pricing, and inventory across North America, making any changes to tariff rates or USMCA content requirements particularly important for dealers already navigating affordability pressures.
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Between the lines: Detroit automakers specifically worry that modifications to the USMCA—as U.S. trade negotiations with Canada and Mexico intensify—could significantly increase their costs and weaken their ability to compete with Asian rivals, according to Reuters.
A proposal to increase the required share of North American vehicle content from the current 75% level would add at least $2 billion in annual costs for each Detroit automaker, according to estimates from two of the companies.
Those costs would come on top of the billions Detroit automakers have already spent on tariffs since last year, with GM and Ford expecting tariff hits of up to $3.5 billion and $1 billion this year, respectively.
What we’re watching: U.S. and Mexican officials are slated to hold their fourth round of trade talks next month, while Canadian and U.S. officials continue meeting this week to avert another round of tariffs.
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