Overview
Marcelo Ebrard, Mexico’s Secretary of Economy, announced that the United States has lowered the average tariff on imported Mexican vehicles from approximately 25% to 15%. This reduction is contingent on the vehicles adhering to the rules of origin outlined in the USMCA (United States-Mexico-Canada Agreement).
Background on Tariffs
President Donald Trump imposed a 25% tariff on certain car imports and a 10% tariff on auto parts from Mexico, effective from April 3, 2025, and May 3, 2025, respectively. However, the US has established exceptions for three countries: Mexico and Canada receive a “discount rate,” while the UK is granted an annual quota of 100,000 units with a 10% tariff.
US Department of Commerce Announcement
On Tuesday, the US Department of Commerce published procedures in the Federal Register for obtaining tariff reductions on car imports, applicable only to Mexico and Canada if they comply with the USMCA rules. The reduction can be retroactive starting April 3, 2025.
Tariff Reduction Details
Ebrard explained that Mexican-made vehicles would receive a 40% discount on the tariff, potentially more in some cases. Post-implementation, Mexican vehicles headed to the US would pay around 15% instead of 25%. The Proclamation by Trump allows vehicles qualifying for preferential tariffs under the USMCA to submit documentation to the Department of Commerce, identifying US content in imported models.
Import Data and Analysis
In 2024, the US imported around 8.1 million vehicles worth approximately $248.8 billion, according to the categories outlined in Annex I of the Proclamation. Around 3.7 million (46%) of these vehicles were eligible for USMCA preference, with 1.07 million from Canada and 2.66 million from Mexico.
Experts’ Opinions
Analysts argue that the US violates the USMCA by imposing tariffs on cars imported from Mexico or Canada that meet USMCA requirements. Ebrard, however, views the new agreement positively, stating that it establishes preferential treatment for Mexico and Canada’s automotive industry compared to other countries.
Key Questions and Answers
- What is the new tariff rate on Mexican cars imported to the US? The average tariff has been reduced from 25% to approximately 15%.
- What conditions must Mexican cars meet to receive this reduced tariff? The vehicles must comply with the rules of origin outlined in the USMCA.
- What are the other tariff exceptions established by the US? The US has set a discount rate for Mexico and Canada, as well as an annual quota of 100,000 units with a 10% tariff for the UK.
- Do experts believe the US is adhering to the USMCA with these tariffs? Some analysts argue that the US is violating the USMCA by imposing tariffs on cars meeting USMCA requirements.
