Mexico will significantly increase the number companies that comply with a regional trade deal in the United States over the next few weeks, Economy Minister Marcelo Ebrard announced Friday, following Washington’s suspension of tariffs on Mexican products entering the country.
Ebrard acknowledged at a press conference that a segment responsible for 10% to 14% of Mexico’s exports could have significant difficulty meeting the standards of the USMCA. He specifically referred to issues in Mexico’s car sector.
Mexico will engage directly with automakers to address these concerns in the coming week to ensure a smoother transition to compliance with the terms of the agreement.
The USMCA’s complex rules of origin require that a certain percentage of auto parts, along with the steel and aluminum used in manufacturing, come from within the region.
According to a Reuters article, major automakers such as General Motors Ford and Stellantis have fought for tariff exemptions on USMCA-compliant products and welcomed the tariff halt. However, companies who do not meet these compliance requirements could face 25% tariffs.
Ebrard has also confirmed that Mexican officials and US Trade authorities will meet next week to continue negotiations on new tariffs on steel, aluminium and imports into the US.
USMCA trade landscape
The USMCA has significantly changed the commercial relations between Canada and Mexico.
Currently, over 50% of Mexico’s exported goods are compliant with the USMCA.
Ebrard anticipates that this portion will reach 85% to 80% in the coming weeks as the companies adapt to the new rules of trade, which could stabilize economic relations between both nations.
A more favorable and predictable trading environment may be achieved by a greater compliance with USMCA regulations.
The challenges ahead
Positively, the expectation of greater compliance with USMCA standards is on the horizon. However, certain industries may find it difficult to adjust to the new standard.
Ebrard cited the auto industry in particular as a sector that could face challenges. He said that not all companies will be able easily to pivot to USMCA Standards.
The Mexican government wants to ensure a strong economic relationship between the two countries while negotiating favorable terms for its own economy.
Claudia Sheinbaum, the president of Mexico, said on Wednesday that due to the rising tensions between the US and the country’s economy, the country might seek new trading partners.
Sheinbaum’s remarks coincide with a growing level of uncertainty in various sectors of the Mexican Economy, especially the automotive industry.
According to Goldman Sachs’ estimates, the US will import $181.4 billion in automobiles and auto components from Mexico by 2024. This represents nearly 10% of Mexico’s economy.
These next negotiations between Mexico & the US could be a crucial chance for both countries in managing the challenges of international trading dynamics.
This post After US Tariff Pause, Mexico Pushes for 90% Compliant Exports may be modified based on updates.
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