Trump Signals He Wont Renew USMCA Trade Deal

General Motors, Ford, and Stellantis are watching Washington closely after the Trump administration declined to renew the U.S. Mexico Canada Agreement, a move that starts a 10 year countdown on the trade deal underpinning North American auto manufacturing and puts fresh pressure on already tariff burdened automakers.

The decision doesn't end USMCA overnight. Instead it triggers annual reviews that will continue until the three countries agree to extend the pact to 2042 or it lapses in 2036. Any of the three nations can walk away sooner, provided they give six months written notice. For now, the agreement stays in force, but the uncertainty alone has consequences for companies that plan factory investments years in advance.

Why Rules of Origin Are the Sticking Point

Seventy five percent. That's the current share of a vehicle's parts that must come from the U.S., Mexico, or Canada for a car to qualify for preferential tariff treatment under USMCA. The Trump administration wants that threshold raised to 82 percent, according to a report from Automotive News, and it wants a new requirement layered on top: 50 percent of a vehicle's parts would need to originate specifically in the United States, not just North America broadly.

The stakes for automakers are concrete. Parts that meet USMCA rules currently avoid the administration's 25 percent tariff. Vehicles that comply still face a 27.5 percent tariff, a combination of the older 2.5 percent duty and the new 25 percent tariff, applied to the value of whatever non U.S. content the vehicle contains. Tightening the origin rules would force manufacturers to rework supply chains that took decades to build, or risk losing preferential treatment altogether.

Automakers Want Certainty, Not Just Favorable Terms

The American Automotive Policy Council, which speaks for Ford, General Motors, and Stellantis, put out a statement this week acknowledging that regional integration has delivered real competitive advantages. But the group didn't stop there. It pointed out that U.S. automakers are currently at a disadvantage compared to importers from countries facing a flat 15 percent tariff with no comparable rules of origin to satisfy.

The council's message to negotiators was blunt: resolve this quickly and durably. Automotive investment requires enormous upfront capital, and companies can't retool plants or shift sourcing on a moving target. Without a level playing field and long term clarity, the group argues, American manufacturers remain boxed in by rules that foreign competitors simply don't face.

The next round of talks is scheduled for July 20 in Mexico City, where negotiators from all three countries will attempt to narrow the gap between what Washington wants and what its neighbors are willing to accept.

What Happens Between Now and 2036

Nothing about the 10 year countdown forces immediate change, but it does mean the threat of exit now hangs over every review cycle. Automakers building new plants or signing multi year parts contracts have to weigh the possibility that origin thresholds could shift again before those investments pay off. For an industry already absorbing steep tariffs, the coming Mexico City talks may determine whether USMCA becomes more predictable or more contested in the years ahead.