Canada, Mexico push to lower US auto tariffs ahead of deadline

Both Mexico and Canada are advancing proposals to reduce U.S. tariffs on automobiles as negotiations over the future of North American trade intensify ahead of an August 19 deadline for a broader deal with Washington.

Mexico's Counteroffer

Mexico is urging the United States to lower tariffs on vehicles produced in North America as part of ongoing discussions to revise the United States-Mexico-Canada Agreement, according to The Wall Street Journal News Corp ↗ 0.77%. The proposal serves as a counteroffer to the Trump administration's demand that vehicles contain a higher proportion of American-made components — specifically, a push to raise North American content requirements to 82% with at least 50% sourced from the United States, up from the current 75% threshold with no U.S.-specific carve-out.wsj+1

Mexico's proposal aims to increase the amount of tariff-exempt content permitted in vehicles while also decreasing the overall tariff rate for North American cars. Currently, the Trump administration imposes a 25% tariff on non-U.S. content in vehicles imported from Canada and Mexico.wsj

Canada Weighs Compromise

Separately, Canadian officials are considering accepting U.S. auto tariffs on exports in exchange for Washington reducing levies on vehicles that comply with the USMCA, The Globe and Mail reported. Under the proposal, the value of American-made components in Canadian vehicles would continue to be exempt from the tariff calculation — meaning that if a Canadian-made car contains 50% U.S. content, the tariff would apply to only half the vehicle's value.theglobeandmail

Industry representatives consulted by Ottawa have indicated that Canadian automakers could withstand a tariff of around 10% to 15% if U.S. content remained exempt. The discussions represent the first outline of a possible compromise over autos, one of the most sensitive areas in the bilateral negotiations.dailysabah

Deadline Pressure

Prime Minister Mark Carney is seeking reductions in tariffs on autos, steel, aluminum, and forestry products as negotiators work toward the August 19 deadline. President Trump has threatened 50% tariffs on an additional $20 billion in Canadian exports if an agreement is not reached.ourtake.bakerbotts+1

Uncertainty remains over whether the complex auto provisions can be resolved in time. One Canadian official suggested an interim agreement postponing further U.S. tariffs while negotiations continue may be more achievable. The talks between the U.S. and Mexico are further along, with Canada having joined the process later — raising concerns in Ottawa that it could be presented with a fait accompli.dailysabah+1