FI showroom red and grey logo
MenuMENU
SearchSEARCH

Trade Dispute Decision Could Move More Auto Manufacturing to Canada, Mexico

Preliminary ruling would give countries more leeway in meeting duty-free threshold.

December 9, 2022
Trade Dispute Decision Could Move More Auto Manufacturing to Canada, Mexico

Vehicles are the top manufactured product traded among the three trade partners.

IMAGE: Getty Images/Morsa Images

2 min to read


Canada and Mexico prevailed in a trade fight with the U.S. over vehicles moved across regional borders in a decision that could lead to more auto parts manufacturing in those countries, Bloomberg reported.

The ruling by a panel convened under the 2020 U.S.-Mexico-Canada Agreement issued a preliminary ruling last month that hasn’t yet been made public, the news service said. The three countries have 30 days to respond to it before its final version is issued.

Ad Loading...

Mexico initiated the challenge in January, Bloomberg reported, to resolve a dispute among the countries over how to calculate the percentage of a vehicle that originates collectively in the three countries. It and Canada say the USMCA allows for more regionally made parts to be covered by tax-free shipping than the U.S. desires, Bloomberg said.

Under the USMCA, which replaced the Clinton-era North American Free Trade Agreement, or NAFTA, at the behest of former President Donald Trump, 75% of a vehicle’s components are to originate in the region to qualify for tax exemption.

The preliminary panel ruling could incentivize manufacturers to make car parts and assemble more cars in Canada and Mexico, particularly the latter, where wages are far lower than those in the U.S., and especially for high-cost components, such as electric batteries, one expert told Bloomberg. He said that the decision could both lower vehicle costs and increase carmaker profits.

The ruling apparently grants leeway in the percentage calculation. The new trade agreement had increased prices of North American-made vehicles due to the difficulty of achieving set domestic content amounts. The U.S. pushed a stricter calculation method than Canada and Mexico to determine parts’ origin, making it harder for plants in those two countries to meet the 75% threshold. NAFTA required a lower, 62.5%, threshold for duty-free shipping.

Vehicles are the top manufactured product traded among the three partners, Bloomberg said.

Ad Loading...

Originally posted on Auto Dealer Today

More Showroom

inside of car, view of steering wheel with hands on it driving
Showroomby Lauren LawrenceMay 29, 2026

Affordable, Safe Cars for Teen Drivers

Families looking to balance affordability and safety in vehicles for their teen drivers can look to the updated list of recommended vehicles by IIHS and Consumer Reports.

Read More →
Gray-scale photo of a line of Mini cars in a dealership parking lot
Showroomby Hannah MitchellMay 27, 2026

Auto Dealers Feel Better But Not Great

A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.

Read More →
exterior daytime image of Porsche North Miami dealership
Showroomby Lauren LawrenceMay 22, 2026

Holman Opens Porsche Dealership in Miami

The North Miami store features the brand’s signature Destination Porsche design concept, combining contemporary architecture and technology to create what the auto group calls an ultra-luxury experience.

Read More →
Ad Loading...
Outside of a Cadillac dealership.
Showroomby Lauren LawrenceMay 20, 2026

Chicago to Gain Cadillac Rooftop in 2027

The two-story Cadillac dealership is being constructed at the former Lincoln Yards site, owned and operated by Canada-based Jack Carter Auto Group.

Read More →
Photo of sold Ford store exterior
Showroomby Hannah MitchellMay 11, 2026

Mid-Atlantic Ford Store Has New Owner

A growing Maryland automotive group is only the 93-year-old dealership’s third owner after its longtime proprietors retired.

Read More →
groundbreaking ceremony for new Barrington Porsche dealership with Murgado Automotive Group and Joseph Nicholas Construction
Showroomby Lauren LawrenceMay 11, 2026

Porsche Dealership Breaks Ground in Illinois

Barrington Porsche will be the new location for Murgado Automotive Group’s existing Porsche dealership currently in the Motor Werks of Barrington auto mall.

Read More →
Ad Loading...
aerial view of Fireside Honda in Ohio
Showroomby Lauren LawrenceMay 6, 2026

Michigan Auto Group Acquires Ohio Rooftops

Feldman Automotive Group added two new brands, Honda and Toyota, to its portfolio with its latest acquisition of four Fireside dealerships in Ohio.

Read More →
Photo of Scout Terra pickup truck outside farm building
ShowroomMay 4, 2026

California VW Dealers Go After Scout

The franchisees’ state-level actions follow a California auto dealers trade group lawsuit against the VW affiliate last year, both efforts to stop the EV maker’s plan to sell direct to consumers.

Read More →
Photo of rear of Mercedes VLE passenger van
Showroomby Hannah MitchellApril 27, 2026

EVs Gain Traction in Europe

First-quarter auto sales increased as more consumers took advantage of government incentives. Hybrid deliveries are leading the way on the electrifieds boom.

Read More →
Ad Loading...
road winding through redwood trees, California EV Market Cools, F&I and Showroom logo
Showroomby Lauren LawrenceApril 22, 2026

California Holds EV Lead Despite Annual Decline

At nearly 14%, California had the lowest zero-emission vehicle market share in the first quarter since the fourth quarter of 2021, according to the California New Car Dealers Association.

Read More →