Report: Mexico-made cars unable to comply with new rules of origin would pay 2.5% tariff
Mexican negotiators have agreed that vehicles assembled at existing plants that do not meet new rule-of-origin percentages and wage requirements will be subject to a 2.5% tariff, according to a report by Stratfor.
Meanwhile, vehicles produced at yet-to-be-built factories will be subject to higher tariffs that will be determined by the White House upon recommendations by the U.S. Department of Commerce.
According to the report, the United States has also successfully pressured Mexico to accept demands mandating that 75% of a vehicle’s components should come from within the trade bloc in order to qualify for tariff-free trade. The current level is 62.5%.
Concerning wage requirements, Mexico and U.S. negotiators have agreed that 40% of a passenger car’s final assembly must be produced in areas where workers make US$16 or more an hour. For trucks, the threshold will be 45%.