Auto Companies, UAW Diverge on How to Tackle USMCA Review
Auto industry representatives asked the Office of the U.S. Trade Representative to let the USMCA autos rule of origin continue -- or to simplify it -- while the United Autoworkers called for "complete rewrite" of the pact next year, including wage floors in all three countries in auto and parts plants and "explicit job security provisions for American workers."
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The panel was sharing its priorities with an interagency government panel Dec. 4 that heard from more than 100 witnesses as USTR gears up for the 2026 USMCA review.
Autos Drive America represents 13 foreign car companies with U.S. operations, which build nearly half of American-made vehicles with 163,000 workers. Rory Heslington, vice president of government affairs, said that despite unrealistic transition periods in USMCA, and a much more stringent ROO for autos than in NAFTA, the sector is largely meeting the requirements. He said that the proportion of auto imports that didn't claim the credit in 2024 was down to 14.2%, from 22.6% in 2023.
Heslington said if there is a further tightening of the rules, companies may stop offering more affordable models. He also asked that the Section 232 tariffs be rescinded on all qualifying vehicles and parts.
The American Automotive Policy Council, which represents Ford, Stellantis and GM, said that even with exemptions to Section 232 tariffs on Mexican and Canadian parts, the ability to back out U.S. content from the value of a vehicle assembled in Canada or Mexico, and a partial rebate on tariffs, the all-in 15% rate for Japanese cars still has a better tariff treatment than a Mexican car with U.S. inputs.
President Matt Blunt said AAPC could only accept a more restrictive rule of origin if North American cars face significantly lower tariffs than Asian or European imports. USMCA allows cost reductions that make his companies' cars competitive, he said.
The UAW argued that seeking lower-cost production in Mexico (and other countries) was a disaster for working families. The UAW's Jason Wade was asked how he'd like to change the labor value content provisions, which are that 40% of passenger vehicles' and 45% of light trucks' embedded labor had to be at an average of $16 an hour or higher.
He said it should not just apply to finished cars, but all inputs that are counted for regional value content. He declined to put a dollar figure on it, but said Mexican workers should enjoy the same standard of living as those in the U.S.
He noted that aerospace workers earn about $6/hour in Mexico (skilled jobs pay a little more). He said his members are paid $40 or $50 an hour in that sector, and have been asked to make up $30 by company negotiators.
According to the Bureau of Labor Statistics, production workers in parts plants earn $30/hour in the U.S., while vehicle assembly workers earn about $38/hour. Autoworkers in Mexico make not quite $5 an hour on average, up from less than $2 when NAFTA began, but when accounting for inflation over the decades, their wages actually declined.
"Something's wrong here," Wade said.
MichAuto's director of government affairs, Paul Corbett, said that using inputs from Mexico and Canada is what keeps Michigan operations cost-competitive with Asia and Europe, and said that 45% of Michigan's imports are from Mexico, and 26% are from Canada. He asked that Section 232 duties be removed on heavy duty vehicles, autos and light trucks, steel, aluminum and copper, and that the USMCA rules of origin eliminate both the labor value requirement and the requirement to use a certain percentage of North American steel and aluminum.
The parts manufacturing sector is even bigger than assembly, with more than 930,000 workers in the U.S., said Ana Meuwissen, senior vice president for government affairs at MEMA, the Vehicle Suppliers Association. She said the current rules of origin should remain, and that changing the rules for heavy trucks, while they are still on a transition through July 2027, would make things worse for the industry.
She said short transitions with significant changes would jeopardize smaller companies, and small and medium-sized firms are 60% of MEMA's membership.
In response to a question from the panel, Meuwissen said that CBP did a good job counseling companies during the transition from NAFTA to USMCA, but MEMA is concerned that such collaboration wouldn't be offered this time.
The panel asked witness Anne Hoef, treasurer of Mabuchi Motor America Corp., why the company makes power seat and power window motors in Mexico, rather than the U.S.
She didn't have a ready answer, but the Japanese company never had production in the U.S.; it shifted over time from Taiwan to China, later adding Vietnam, and then added Mexico in 2014.