Mexico’s automotive industry might have difficulty meeting a USMCA stipulation to source 70pc of the aluminum and steel used to make cars from North America.

 

The trade deal, for which the amendments were published June 3 and which takes effect July 1, initially dictated at least 70pc of steel and aluminum used to make vehicles must be produced in North America, as must 60 of the vehicles’ overall content.

 

The changes also demand the auto industry purchase certain pieces of the assembly process from North America producers, instead of just raw materials as the trade deal initially stated, Miguel Elizalde, president of the Mexican heavy vehicle makers’ association, told Davis Index.

 

However, Elizalde added, the auto industry will have difficulty meeting requirements for local steel and aluminum use.

 

In the original USMCA pact, which was signed by the US, Mexico and Canada in December, the three countries accepted rigorous definitions of steel and aluminum under Automotive Rules of Origin, but the criteria didn’t include auto parts or the assembly process.

 

The regulatory changes will benefit the steel and aluminum sectors, however, the automotive industry will have little time to adapt to the changes, Elizalde said.

 

Mexico’s car production plunged by 93.6pc to 22,119 units last month from 350,060 in May 2019, according to figures released on June 5 by the National Statistics Agency.

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