Matt Blunt, who heads a lobbying group representing the Detroit Three automakers, says the USMCA rules on labor value and regional origin are designed to achieve the Trump Admin.’s objective of boosting U.S. manufacturing.
Automakers and suppliers will face challenges once the new U.S.-Mexico-Canada trade agreement takes effect July 1.
Matt Blunt, the former governor of Missouri who leads the American Automotive Policy Council, says the new trade pact includes complicated new rules of origin that require both automakers and their suppliers to keep more detailed records if they want to continue to avoid new tariffs as they move goods back and forth across the U.S.’ northern and southern borders. “It’s very challenging and very complicated from an administrative context,” he says.
The AAPC, which lobbies specifically for General Motors, Ford and Fiat Chrysler Automobiles in Washington, was unsuccessful in delaying the implementation of the USMCA, which replaces the North American Free Trade Agreement (NAFTA), Blunt says.
“July 1 was an aggressive date,” he says. However, there is a six-month phase-in period, which allows manufacturers and suppliers to adjust to the new rules and “get the paperwork together” without incurring higher tariffs, Blunt says.
Blunt notes during a recent webinar organized by the Center for Automotive Research in Ann Arbor, MI, that the easiest part of the new USMCA to navigate may be new rules covering steel and aluminum used in vehicles and vehicle components. GM, Ford and FCA will meet the USMCA requirement that most of the steel and aluminum used in a vehicle come from the three signatory countries, Blunt predicts.
Suppliers operating in North America also are expected to meet the same standards, he says.
Even more complicated are the rules of origin covering labor and regional content.