Jiji Press WASHINGTON (Jiji Press) — U.S. President Donald Trump’s administration plans to propose significant changes to the rules of origin in the North American Free Trade Agreement, in a way to force automakers to move their plants from Mexico to the United States, The Wall Street Journal reported Friday.
The proposal features the introduction of a requirement that autos and auto parts have at least 50 percent U.S.-made content to qualify for tariff breaks, the economic daily reported, citing people familiar with the discussions as sources.
Mexico and Canada are expected to react sharply against the U.S. proposal and NAFTA renegotiations will likely be in rough waters, critics say.
Under the current NAFTA, vehicles with 62.5 percent content made in the three North American countries qualify for tariff breaks.
According to the report, the Office of the U.S. Trade Representative is considering seeking 85 percent NAFTA-region content, along with the requirement of 50 percent U.S. content.
The United States aims to make the proposal during the fourth round of NAFTA renegotiations with Mexico and Canada, set to be held in Washington from Wednesday.
The Trump administration has been claiming that autos exported from Mexico and Canada to the United States have low U.S.-made content.