By Laura Dhillon Kane | Bloomberg
The White House is pushing for new rules on auto production that would require at least 50% US components for vehicles manufactured in the North American trade zone, Canadian Prime Minister Mark Carney confirmed.
Canadian-made vehicles already hit the 50% threshold, on average, Carney told reporters in Ottawa on Tuesday. But many Mexican vehicles do not.
The Wall Street Journal reported the US proposal last week. The US-Mexico-Canada Agreement, which was negotiated during President Donald Trump’s first term, includes provisions that require 75% of a vehicle’s value to come from North America to qualify for tariff-free treatment, among other rules. But the president imposed new tariffs on foreign autos early in his second term, saying the policy would give auto manufacturers an incentive to move jobs to the US.
Carney made the remarks on the same day his minister responsible for US trade, Dominic LeBlanc, is set to meet with US Trade Representative Jamieson Greer in Washington.
The meeting comes as a scheduled review of the USMCA gears up. In a letter to Greer and Mexican Economy Minister Marcelo Ebrard, LeBlanc confirmed that Canada wants to renew the agreement for another 16 years.
The US and Mexico have started formal bilateral discussions on trade, but Carney has faced criticism Canada is lagging behind. He said the US has about 60 technical trade issues with Mexico, compared with about 30 for Canada — some of which are matters at a provincial level.
But for Canada, there are more “fundamental, structural issues,” Carney said, pointing to Trump’s sectoral tariffs on autos, steel, aluminum and lumber. “We’re looking to determine whether there’s a possibility of a new partnership there,” he said.
He added that he was “not endorsing” the 50% US content rule proposal, but he noted that the demand from the US was a much bigger issue for Mexico given the structure of its auto sector.
The sectoral tariffs have badly hurt those Canadian industries and weighed on the broader economy. Canada has responded by adding counter-tariffs to US steel and the American components of autos, and some provinces have pulled American alcohol off government-run liquor store shelves.
In the letter to Greer and Ebrard, LeBlanc praised the North American trade agreement, but said Canada is willing to consider proposals from either country that will benefit the prosperity of all three nations.
“In parallel, discussions with the United States on addressing sectoral tariffs will be essential,” he said.
Canada’s chief negotiator to the US, Janice Charette, will join LeBlanc in his meeting with Greer before they return to Ottawa later Tuesday.
