The U.S. interpretation of vehicle-content rules under the United States-Mexico-Canada Agreement could make it too complicated for automakers to comply, say industry stakeholders. The result is that they might simply turn to low cost overseas jurisdictions for parts and pay a tariff penalty rather that use regional suppliers.
Trilateral consultations launched in August failed to resolve the dispute over the U.S. interpretation of rules that require 75 percent of a vehicle’s contents be made in the three countries to avoid tariffs, Lama Khodr of Global Affairs Canada said Nov. 5.
“Canada will continue to closely monitor developments and is considering next steps.”