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Duty Dilemma: Canada joins complaint against U.S. auto trade practices

Ottawa, Ontario — The Canadian government has officially joined Mexico in its request for a dispute settlement panel to help resolve ongoing trade conflicts with the United States that both countries consider to be in violation of USMCA trade agreements.

Under USMCA, 75 percent of a vehicle’s components must originate in North America to qualify for tax-free status, up from 62.5 percent under NAFTA.

Trade Minister Mary Ng voiced her displeasure with how the U.S. has chosen to implement these changes since USMCA came into effect in 2020.

“The interpretation that the United States adopted…is inconsistent with USMCA and the understanding shared by the parties and stakeholders throughout the negotiations,” said Ng in a statement from Thursday.

U.S. trade spokesperson Adam Hodge said in an email to Reuters that the Biden government is confident that its interpretation is in line with USMCA.

President of the Canadian Automotive Parts Manufacturers’ Association, Flavio Volpe expressed concern that the U.S. approach might persuade manufacturers to use cheaper parts from outside North America and accept the 2.5 percent tariff that the United States would then impose on their vehicles.

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