The United States is demanding that at least half of all automobiles built under the United States-Mexico-Canada Agreement be manufactured domestically, according to a proposal introduced during ongoing renegotiations with Mexico. The move targets a key pillar of the trade deal that replaced NAFTA in 2020.
What the US wants
American negotiators have put forward a 50% domestic content requirement for vehicles covered by the USMCA. That means half of a car’s value would have to come from parts and labor within the United States itself—not just the broader North American region. The demand goes beyond the current pact’s regional value-content rules, which allow automakers to count inputs from all three member countries toward meeting a threshold.
The proposal is part of a broader review of the trade agreement that President Donald Trump championed. While the USMCA originally aimed to boost North American manufacturing, the US now wants an even tighter link between production and the US market.
If adopted, the rule would force car companies to rethink their supply chains. Many automakers currently assemble vehicles in Mexico using components sourced from Asia, Europe, or other parts of North America. To hit a 50% US-only target, manufacturers would need to shift more parts production—and assembly work—north of the border.
That could raise costs for some models and pressure profit margins, especially for companies that rely heavily on Mexican plants for exports to the US. But it could also create jobs in American factories that produce engines, transmissions, and electronics.
Mexico’s position
Mexican officials have not yet publicly responded to the US proposal. The country’s auto sector is a major employer and export engine, and any change that limits how much value can come from Mexican plants would hit the economy hard. Negotiators in Mexico City are expected to push back, arguing that the current regional content rules already require substantial North American integration.
The two sides are meeting as part of a routine review built into the USMCA. The agreement originally called for a joint review of its automotive rules after five years, but the Trump administration accelerated the process. Talks began earlier this year.
What’s at stake
The auto industry accounts for billions of dollars in annual trade between the US and Mexico. Any shift in sourcing rules would ripple through dealerships, parts suppliers, and logistics networks on both sides of the border. The US demand could also set a precedent for other sectors if the renegotiation widens to include steel, aluminum, or agricultural goods.
For now, the focus is on cars and light trucks. The US has not specified a timeline for when it wants the 50% rule to take effect, but negotiators are aiming for a deal before the end of the year. Mexican officials are reviewing the proposal and are expected to present a counteroffer in the coming weeks.
