EU seeks to tighten USMCA rules of origin for industrial products, demanding more U.S. content

The United States government is pushing to implement stricter rules of origin within the USMCA trade agreement, extending beyond the automotive sector to encompass other industrial products. A U.S. official, speaking anonymously to The New York Post, indicated that the goal is to mandate a higher percentage of U.S. content in these goods.

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The USMCA did not serve to control the deficit as the president intended, so that is really the heart of the matter.

This initiative is reportedly linked to President Donald Trump's decision to forgo a lengthy renewal of the USMCA in favor of annual reviews. The official cited persistent trade deficits with Canada and Mexico as the primary motivation, stating the agreement had not effectively controlled these imbalances as intended.

Discussions also involve market access opportunities, including Canada's reduction of tariffs on U.S. dairy products and Mexico's potential tariffs on U.S. corn. The U.S. official expressed a desire for stricter rules of origin for automobiles manufactured in Canada and Mexico, requiring a significant portion of U.S. materials. The intention is to prevent companies from shifting production to Mexico to import goods into the U.S. tariff-free.

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We believe we must tighten those [rules of origin for automobiles], and we believe we need to have equally strict rules for other industrial products outside the automotive sector, and the Mexicans have let us know they are interested in that.

U.S. Trade Representative Jamieson Greer confirmed in a statement that the U.S. did not agree to renew the USMCA in its current form. The statement indicated a commitment to working with Mexico and Canada to address the agreement's shortcomings and reduce trade deficits, with the pact remaining in effect until these issues are resolved or the agreement is terminated.

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The United States did not agree to renew the USMCA in its current form.