The United States-Mexico-Canada Agreement (USMCA) is facing a major review this year, and the outcome could have a big impact on the North American auto industry. The trade agreement, which replaced NAFTA in 2020, allows goods to move between the three countries without tariffs as long as they meet certain requirements. For automakers, that means at least 75 percent of a vehicle’s parts must come from North America, and a large portion of production must involve workers earning at least $16 an hour. Automakers also must source most of their steel and aluminum from the region to qualify for lower trade costs.

The review comes as President Donald Trump’s tariffs continue to change how vehicles and parts move across borders. While some USMCA-compliant vehicles and parts still receive special treatment, many imports now face higher tariffs. Automakers and suppliers are pushing for the agreement to stay in place because the industry depends heavily on the close connection between factories and suppliers across the U.S., Canada and Mexico. Industry leaders warn that uncertainty over future trade rules could delay investments and increase costs. At the same time, the U.S. may push for even stricter rules requiring more American-made content in vehicles, which could create tension with Canada and Mexico during negotiations.