USMCA Auto Rules Face First Review Since 2020

The US International Trade Commission (ITC) has launched a formal investigation into the automotive rules of origin under the USMCA, initiating a review process that could reshape supply chains, investment strategies, and regulatory expectations across North America. The agency stated the investigation will evaluate “the impact on the US economy, the effect on US competitiveness, and the relevance considering recent technological changes,” according to its official announcement.

The probe marks the first structured reassessment of the agreement’s automotive provisions since the USMCA entered into force in 2020, replacing NAFTA. The ITC confirmed it will hold a public hearing later this year and publish its final report in July 2027. While the timeline extends over multiple years, the announcement itself has introduced a new phase of regulatory uncertainty for automakers and suppliers operating within the region.

At the center of the review are the rules of origin requirements that determine whether vehicles qualify for tariff-free access to the US market. These rules were significantly tightened under the USMCA to increase regional production and reduce reliance on external supply chains. Currently, automakers must ensure that 75% of a vehicle’s content originates in North America to qualify for duty-free treatment. In addition, 40% of the content of passenger vehicles must be produced in the United States or Canada, rising to 45% for pickup trucks. These thresholds are calculated based on a defined list of “core parts,” including engines, transmissions, body panels, and chassis components.

These provisions have had a direct impact on manufacturing strategies since their implementation. Automakers and suppliers have been required to restructure sourcing, increase regional integration, and adjust cost models to comply with the higher thresholds. The ITC’s investigation will assess whether these requirements remain aligned with current industry conditions, particularly as the sector undergoes structural changes driven by electrification, software integration, and global competition.

The review is taking place within a broader policy context in which US trade authorities are signaling potential adjustments to the agreement. The Office of the United States Trade Representative has indicated that possible reforms to the USMCA could include stricter rules of origin for industrial goods. This suggests that the ongoing evaluation may lead to tighter requirements rather than a relaxation of existing thresholds.

Major automakers have responded by emphasizing the importance of maintaining the agreement’s current framework. Companies including General Motors, Tesla, Toyota, and Ford have urged US authorities to extend the USMCA, describing it as essential to sustaining automotive production in the United States. Their position reflects concerns that regulatory instability or stricter compliance requirements could increase costs and disrupt established supply networks.

Stellantis has also weighed in on the debate, focusing on competitive dynamics with imports from outside North America. The company stated that vehicles produced outside the region should be required to meet standards that “effectively reflect or match those imposed by the USMCA,” or alternatively, that tariffs on compliant Mexican and Canadian vehicles should be removed. Stellantis added that under current conditions, including tariffs of approximately 15% on imports from Japan, “US-compliant vehicles will continue to lose market share to Asian imports, to the detriment of US automotive workers.”

The ITC’s investigation will also examine whether the rules of origin remain relevant in light of technological shifts in the automotive industry. The transition toward electric vehicles, the increasing role of software-defined architectures, and the globalization of component supply chains are reshaping how vehicles are designed and manufactured. These changes raise questions about whether existing definitions of regional content and core components adequately capture value creation in modern vehicles.

At the same time, the review is unfolding alongside broader trade tensions and legal disputes related to US tariff policies. Multiple global companies, including parts manufacturers and vehicle producers, have filed lawsuits against the US government over tariffs imposed under emergency powers. Among those involved are firms such as BYD, BorgWarner, Goodyear Tire & Rubber Company, Kawasaki Motors Manufacturing Corp USA, Yokohama Tire, and Yamazaki Mazak. The litigation highlights the broader cost pressures affecting the industry and underscores that the USMCA review is part of a wider reassessment of US trade policy.

For Mexico and Canada, the outcome of the ITC’s investigation could have direct implications for manufacturing activity and investment flows. The current rules of origin have already driven increased regionalization of supply chains, prompting companies to expand production capacity within North America. Any move toward stricter requirements could intensify this trend, requiring additional investment in areas such as powertrain components, electronics, stamping, and battery production.