The US is fighting with Mexico and Canada over TMEC’s ​​auto rules of origin

For example, if the central party uses 75% of regional content and therefore qualifies under this requirement, Mexico and Canada argue that T-MEC allows them to round the number to 100%, for purposes of a broader computation of general regional content from a vehicle. The US argues that 75% is the percentage that should be used in the broader calculation, making it difficult to reach the general tax-exempt threshold.

Adam Hodge, a spokesman for the US Trade Representative, said by email that the US “remains committed to the territorial value requirements that countries have agreed to under the T-MEC.” Mexico’s Economy Ministry press office declined to comment immediately. A spokesman for Canadian Trade Minister Mary Ng also did not comment.

US Trade Representative Catherine Taye, appointed by President Joe Biden, has repeatedly emphasized in recent weeks that her administration adheres to a “labor-focused” trade policy and seeks friendly relations with the nation’s unions. Last month, he addressed the nation’s largest labor union in an action his manager described as a historic first.

United Auto Workers spokesperson Brian Rothenberg said in an email that the group supports the Biden administration’s tougher interpretation of T-MEC.

TMEC rules

For Mexico, the Biden administration’s demand is “surprising,” because the country believed the problem was resolved in talks with President Donald Trump’s administration in 2018 and 2019, people close to the talks said. Automobiles are a central topic at T-MEC, and Mexico views the US requirements as an attempt by the government to renegotiate a key aspect of the agreement.