Potential removal of USMCA would impact Detroit automakers and disrupt North American automotive industry
From Investing.com: 2025-01-04 04:30:00
The potential removal of the USMCA free trade agreement could have a significant impact on the North American automotive industry, particularly the “Detroit 3” automakers – General Motors, Ford, and Stellantis. Mexico and Canada play a critical role in the automotive supply chain, with over 30% of U.S. vehicle sales originating from these countries.
Approximately 20% of the value of U.S.-assembled vehicles relies on imported parts, making automakers vulnerable to supply chain disruptions and steep tariff costs if free trade status is removed. Detroit automakers are at higher risk due to their reliance on Mexican manufacturing.
President-elect Donald Trump has announced plans for significant tariffs on Canada, Mexico, and China, potentially breaching the USMCA trade agreement. The U.S. is the primary market for Mexican and Canadian exports, with tariffs also posing challenges for Asian automakers and electronics firms utilizing Mexico as a manufacturing hub.
Trump’s proposed tariffs could spark tensions with major trading partners and disrupt the automotive industry. The USMCA may face renegotiation in 2026, allowing for potential amendments or withdrawal from the agreement. This uncertainty adds to the challenges faced by automakers in the evolving trade landscape.
Read more at Investing.com: Who would be hit the most by a removal of USMCA free trade status By Investing.com