Automakers are projected to sell 140,000 fewer cars per year under the proposed U.S.-Mexico-Canada (USMCA) agreement according to a report released by the U.S. International Trade Commission (ITC).
The report, released on April 18, attributes the decline partially on changes to the percentage of a car’s parts that must come from one of the three countries to qualify for duty-free treatment. Under the new agreement, this requirement – known as rules of origin – would be raised from 62.5 percent to 75 percent on domestic content for cars.
Last year, the RV Industry Association’s government affairs team successfully ensured that the rules of origin requirements for RVs would not increase. Motorhomes will remain at 62.5 percent on domestic content for duty-free treatment, the same as under current North American Free Trade Agreement (NAFTA) rules. Travel trailers will need to be at 50 percent domestic content, again the same as under NAFTA.
Additionally, the ITC determined that the agreement would boost U.S. GDP by 0.35 percent over five years and boost employment by 0.12 percent. However, much of this increase comes from reduced trade uncertainty, which was mainly caused by the initial threat of pulling out of NAFTA.