The United States has announced that automobile parts from Canada and Mexico complying with the Canada-U.S.-Mexico Agreement (CUSMA) will be exempt from new tariffs on vehicle imports. This decision comes as a relief to automakers and suppliers across North America who rely on cross-border trade to keep the industry humming.
According to guidance released by U.S. Customs and Border Protection, parts that meet the regional content requirements set out in CUSMA will not be subject to the 25% tariff imposed on vehicle imports. This means that components produced in Canada and Mexico can continue to flow into U.S. factories without additional costs, as long as they adhere to the trade pact’s rules.
The tariffs, set to take effect this Saturday, aim to protect the U.S. automotive industry from overseas competition. However, parts and vehicles that do not comply with CUSMA, as well as non-U.S. parts in passenger vehicles completed outside the United States, will face the 25% levy starting at 12:01 a.m. on May 3.
Industry experts believe this exemption will help maintain the integrated supply chains that have developed across North America over decades. “The exemption is crucial for keeping production costs down and ensuring that vehicles remain affordable for consumers,” said an industry analyst.
The CUSMA, which replaced the North American Free Trade Agreement (NAFTA), includes stricter rules for automotive content, requiring a higher percentage of North American-made parts. The exemption aligns with these provisions, encouraging manufacturers to source parts within the continent.
Automakers are now focusing on adjusting their supply chains to maximize the benefits of the exemption while mitigating the impact of tariffs on parts sourced from outside North America.
