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Mexico's auto industry warns about complex future ahead of USMCA review

Mexico's automotive industry has warned of "complexity" in the future of the United States-Mexico-Canada Agreement. Executives cited concerns about tighter rules for origin and the scrutiny of Asian components.

Heavy-vehicle makers expressed their concerns at the CIAN Automotive Conference about adapting to current rules while meeting USMCA requirements. To qualify for tariff-free entry, the agreement requires that a percentage of vehicle components originate in North America.

Rogelio Garca, president of the National Association of Bus, Truck and Tractor Truck Manufacturers, (ANPACT), said that the current rule is not feasible, given the fact that components are often imported multiple times prior to final assembly.

After Donald Trump announced last week that he would be imposing 25% tariffs on imports of heavy trucks, the industry is concerned.

In 2026, the USMCA will be reviewed. It replaced the North American Free Trade Agreement (NAFTA) in 2020.

Rogelio Garcia, the head of the Mexican Association of the Automotive Industry, called for greater coordination between industry groups in North America. He stated, "it's the Same Industry."

Analysts say that Mexico will also raise import tariffs to 50% on cars from China and other Asian nations, as part of a larger overhaul of import duties aimed at protecting American jobs and addressing U.S. concern.

Francisco Gonzalez, the head of the national association of auto parts INA, highlighted that smaller local suppliers - Tier-2 and Tier-3 firms - should be developed faster to boost supply chains and capabilities in software and electronic.

Leaders in the industry expressed cautious optimism despite the challenges. Garza stated that "the outlook is complex but we are prepared." (Reporting and editing by Jamie Freed; Natalia Siniawski)

(source: Reuters)