MENU
SEARCHPreliminary ruling would give countries more leeway in meeting duty-free threshold.
Vehicles are the top manufactured product traded among the three trade partners.
IMAGE: Getty Images/Morsa Images
Canada and Mexico prevailed in a trade fight with the U.S. over vehicles moved across regional borders in a decision that could lead to more auto parts manufacturing in those countries, Bloomberg reported.
The ruling by a panel convened under the 2020 U.S.-Mexico-Canada Agreement issued a preliminary ruling last month that hasn’t yet been made public, the news service said. The three countries have 30 days to respond to it before its final version is issued.
Mexico initiated the challenge in January, Bloomberg reported, to resolve a dispute among the countries over how to calculate the percentage of a vehicle that originates collectively in the three countries. It and Canada say the USMCA allows for more regionally made parts to be covered by tax-free shipping than the U.S. desires, Bloomberg said.
Under the USMCA, which replaced the Clinton-era North American Free Trade Agreement, or NAFTA, at the behest of former President Donald Trump, 75% of a vehicle’s components are to originate in the region to qualify for tax exemption.
The preliminary panel ruling could incentivize manufacturers to make car parts and assemble more cars in Canada and Mexico, particularly the latter, where wages are far lower than those in the U.S., and especially for high-cost components, such as electric batteries, one expert told Bloomberg. He said that the decision could both lower vehicle costs and increase carmaker profits.
The ruling apparently grants leeway in the percentage calculation. The new trade agreement had increased prices of North American-made vehicles due to the difficulty of achieving set domestic content amounts. The U.S. pushed a stricter calculation method than Canada and Mexico to determine parts’ origin, making it harder for plants in those two countries to meet the 75% threshold. NAFTA required a lower, 62.5%, threshold for duty-free shipping.
Vehicles are the top manufactured product traded among the three partners, Bloomberg said.
Originally posted on Auto Dealer Today
Conversion rates were flat last week at 63%, Black Book analysts calculated, as low-mileage and almost-near units outpaced the overall market.
Read More →
Trade relations between the European Union and the U.S. are at risk, causing the European Automobile Manufacturers Association to push lawmakers to make a decision.
Read More →
Understanding the risks and benefits of retail accounting and Super CFCs can help you better present options to your dealer partners.
Read More →
China easily reigns in the segment, but European countries’ adoption rates are growing. The U.S., probably due to market size, has the second biggest EV fleet.
Read More →
The full-size pickup segment, which has been dominant in the U.S., ended 11 consecutive weeks of gains with a slight dip last week.
Read More →
Wholesale auto conversion rates dropped slightly as auction buyers proved picky last week, analysts observed.
Read More →
Fast charging of electric vehicles provides a solution for range anxiety, but it also poses a risk to battery cycle life due to increased temperatures, according to an EV supply chain data provider.
Read More →
Expanding Midwest automotive group picks up three stores as part of the robust transaction activity early this year.
Read More →
Cox Automotive data shows Americans doubled down on big-is-better despite price increases. Slightly higher incentives helped fuel the demand.
Read More →
The automaker says its movement of some electric-vehicle work to the S.C. factory is part of a more tailored product focus. It also plans to add a new hybrid model to the plant’s itinerary.
Read More →