USMCA to Exclude Mexico and Canada from Auto Tariffs

The new U.S.-Mexico-Canada Agreement on trade will preserve President Donald Trump’s ability to impose threatened 25 percent global tariffs on autos while largely exempting passenger vehicles, pickup trucks and auto parts from Canada and Mexico, a side-letter to the agreement showed on Monday.



Should U.S. President Donald Trump impose “Section 232” autos tariffs on national security grounds, Mexico and Canada would each get a tariff-free passenger vehicle quota of 2.6 million passenger vehicles exported to the United States annually.


usdcad Canadian dollar graph, October 1, 2018

Pickup trucks built in both countries will be exempted entirely, the side-letter said.

Mexico will get an auto parts quota of $108 billion annually, while Canada will get a parts quota of $32.4 billion annually in the event of U.S. autos tariffs. The quotas are significantly above existing production volumes in each country, allowing for some export growth.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza