NAFTA: Minimum regional content for heavy trucks hikes to 70%
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Mexico and the United States agreed that the heavy trucks that are produced and marketed in the NAFTA region must have 70% North American content to be exported free of tariffs to any of the three countries that make up the bloc.
This change represents an increase of 10% compared to the current agreement. In case the manufacturers installed in the region do not comply with this percentage, they will have to pay a tariff of 4% for tractor trucks and 25% for heavy trucks.
This was announced by the Secretary of Economy, Ildefonso Guajardo Villarreal, during a meeting with industrial leaders in Mexico City last days.
In this regard, Miguel Elizalde, president of the National Association of Producers of Buses, Trucks and Tractor Trucks (ANPACT for its acronym in Spanish), said that the change is reasonable if it is considered that the request of the United States was to increase the minimum content to 85%, although he acknowledged that companies will have to rethink their supply chain and execute investments to comply with the new rules.
On August 27, the governments of Mexico and the United States reached a preliminary agreement to review key parts in the modernization of the North American Free Trade Agreement (NAFTA).
It is expected that Canada will decide to join the agreement before September 29, the date on which President Donald Trump will send to Congress his proposal to renew the trilateral agreement, or if necessary, change it by a bilateral pact between Mexico and the United States alone.
With 152,903 heavy trucks manufactured in 2017, Mexico ranked sixth worldwide among heavy vehicle producers. According to the figures of the ANPACT, 114,251 of those units were exported.