The International Trade Commission has released its second report on the economic impact on the U.S. of the U.S.-Mexico-Canada Agreement automotive rules of origin, their operation and effects on the U.S. economy and U.S. competitiveness, and whether the ROOs remain relevant in light of technological changes in the U.S. Information the ITC’s first report is available here; the next three reports are due in 2027, 2029, and 2031.
According to an ITC press release, the new report finds that the ROOs had concentrated effects on the U.S. automotive industry but a negligible impact on the overall U.S. economy. They increased employment, production, revenue, capital expenditures, and profits for U.S. producers of parts and materials but slightly decreased those things for U.S. producers of light vehicles. They also reduced U.S. imports of light vehicles from Canada and Mexico but increased imports from non-USMCA countries. The average price of light vehicles in the U.S. market saw a slight increase as well.
The report also conclude that three competitiveness factors for the automotive industry are the most likely to be affected by the ROOs: cost, investment, and product differentiation.
- Most sourcing changes associated with meeting the ROOs resulted in an increase in production cost, though some resulted in a decrease or no change.
- Total investment in U.S. automotive manufacturing increased from $27.9 billion in 2019 to $87.8 billion in 2023 before declining to $34.1 billion in 2024. These changes are only partially attributable to the ROOs, though investments in parts manufacturing specifically are more likely to be ROO-related.
- Since the USMCA took effect on July 1, 2020, U.S. production of both motor vehicles and parts has increased, changes at least partially attributable to the ROOs.
- There has been little change in U.S. vehicle market share in Canada and Mexico, while the import share of U.S. parts has increased in Canada but decreased in Mexico.
- Other individual factors—the Inflation Reduction Act, labor strikes, macroeconomic conditions, and more—had a greater impact on the U.S. automotive industry but no no single factor was more impactful than the ROOs.
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