The US violates the USMCA side letter with auto tariffs.

The United States violates a side letter of the United States-Mexico-Canada Agreement (USMCA) that grants preferential treatment to Mexico when U.S. Customs collects tariffs under Section 232.

The side letter protects automobile imports from Mexico that comply with the rules of origin of this trade agreement from the imposition of tariffs in the United States.

It also excludes 59.5% of Mexican auto parts exports that comply with the same rules of origin, considering the equivalent value of these sales in 2024.

This document was signed on November 30, 2018, by then-White House Trade Representative Robert Lighthizer, who led the United States negotiations for the creation of the USMCA.

Specifically, the United States committed to excluding from tariffs 2.6 million passenger vehicles imported from Mexico annually; light trucks imported from Mexico; and auto parts totaling $108 billion in declared customs value annually.

In 2024, Mexico exported 2,972,000 vehicles covered by the product categories listed in Proclamation 10908 of March 26, 2025, under Section 232, which imposes a 25% tariff on U.S. auto imports originating worldwide.

In addition, Mexico exported auto parts to the U.S. market worth $181.397 billion in 2024.

Starting April 3, 2025, the United States will impose a 25% tariff on all auto imports, with the exception of U.S. content in vehicles imported from Mexico or Canada.

Meanwhile, Economy Secretary Marcelo Ebrard said this Friday: "What has tariffs are motor vehicles; we're waiting for the regulation, which will be published today or Monday. They'll apply discounts by model: the more components they have from the region, the cheaper the famous tariff."

The United States may invoke Section 232 of the Trade Expansion Act of 1962 when it believes the importation of certain products threatens the country's national security.

Supplementary agreements

The United States signed side letters with Canada and Mexico stipulating that it excludes certain quantities of vehicles and auto parts from potential Section 232 tariffs.

The side letters provide that automotive products included in this exclusion would be subject to duty-free treatment under the USMCA (if they met USMCA standards) or to the U.S. most-favored-nation (MFN) rate applied on August 1, 2018.

The exclusions include passenger vehicles classified under subheadings 8703.21 through 8703.90, light trucks classified under subheadings 8704.21 and 8704.31, or any auto part within the scope of that measure,

According to the side letter, the United States will not adopt or maintain a measure imposing tariffs or restrictions on the importation of such goods from Mexico for at least 60 days after the measure is imposed.

After the 60-day period, the United States will exclude from the measure: 2.6 million passenger vehicles imported from Mexico annually; light trucks imported from Mexico; and auto parts totaling US$108 billion in declared annual customs value.

Goods covered by the exclusion will be eligible for preferential tariff treatment applicable under NAFTA or USMCA.

If the goods do not qualify as originating, the customs duty applied by the United States will not exceed the MFN rate applied by the United States in effect on August 1, 2018.