Mexico Secures Major Victory as US Tariffs on Auto Parts Are Avoided | Carscoops

      President Trump has provided an exemption from revised auto tariffs for parts that comply with the USMCA from Mexico and Canada.

      Mexico is pleased that parts compliant with the USMCA are free from the 25% tariffs introduced under new regulations.

      Suppliers now have the opportunity to request a two-year offset to mitigate parts tariffs due to the updated rules.

      This exemption does not extend to cars manufactured internationally and then brought into the country.

      In the aftermath of the Trump administration's tariff announcements, which disrupted global economies, several policy amendments have been implemented to offer relief to certain industries. Automotive parts suppliers from Canada and Mexico are among those benefiting, as they can now qualify for exemptions. Failing to make this adjustment could have led to further instability in the industry.

      Under the revised tariff framework, parts that align with the United States-Mexico-Canada Agreement (USMCA) are exempt from the 25% duty that applies to most other components. This is a shift from Trump’s earlier assertion that non-U.S. parts would eventually incur the same 25% tariff. It is now confirmed that the existing 0% duties on compliant parts will remain for the time being.

      According to Bloomberg, recent changes implemented allow companies within the auto sector to apply for tariff offsets on parts for a duration of up to two years. This measure offers them some flexibility to transfer parts production to the U.S. Mexico, being the largest source of auto parts imports into the United States, stands to benefit the most, with Canada coming in second.

      Mexico has expressed approval regarding the USMCA exemption. President Claudia Sheinbaum described it as “good news” and emphasized her ongoing collaboration with President Trump to secure better conditions than previously existed.

      “There’s a preferential treatment for everything produced within the trade agreement, especially for auto parts, which have zero tariffs,” she noted.

      Meanwhile, President Trump continues to impose a 25% tariff on imported vehicles as part of his strategy aimed at encouraging car manufacturers to increase production within the U.S. While some brands have pledged to expand their production in the United States, experts anticipate that the prices of both new and used vehicles will rise nationwide as dealers deplete their pre-tariff inventory.