The CUSMA review has moved into a more consequential phase. The first formal bilateral negotiating round between the United States and Mexico concluded on May 29, 2026, with Canada not yet at the table. At the centre of those talks are aggressive US demands to tighten automotive rules of origin, a change that could materially raise the bar for duty-free treatment across the North American auto sector ahead of the July 1 review deadline.
What the US is asking for
US negotiators have tabled proposals to raise required North American auto content from the current 75% to 82% for vehicles to qualify for preferential treatment. More significant for sourcing decisions, Washington is pushing a new US-specific minimum: at least half of a vehicle’s materials and components would have to originate from the United States. Reporting indicates the initial proposal contained no provision recognizing Canadian content.
The current agreement requires 75% regional value content alongside labour-value-content thresholds (40-45% of value from higher-wage facilities) but contains no US-specific carve-out. A US-content floor would be a structural shift, not merely a higher percentage, and further negotiating rounds are planned.
Where Canada stands
Canada is not participating in the current US-Mexico rounds, which are proceeding bilaterally. Trade minister Dominic LeBlanc is heading to Washington to kick-start Canada’s own talks, having met with provincial and territorial trade ministers on May 26 to align positions. As context, US Trade Representative Jamieson Greer has signalled that the US intends to keep tariffs on its USMCA partners. Former ambassador Kirsten Hillman has cautioned that scrapping CUSMA would be “phenomenally disruptive,” and does not expect the agreement to disappear despite the looming July 1 deadline.
What it means for importers and exporters
Tighter automotive rules of origin would raise the regional and US-content thresholds that goods must meet to claim duty-free treatment under CUSMA. For auto-sector importers, that has direct implications for sourcing strategy, certification of origin, and landed cost. A US-specific content minimum, in particular, could disqualify vehicles and parts that currently qualify under the regional standard, exposing them to applicable tariffs.
With the July 1 review approaching and key terms still unsettled, importers should review their supply chains and origin documentation now, model the impact of a higher 82% threshold and a possible US-content floor on affected product lines, and confirm that certificates of origin reflect current sourcing. NGB is monitoring the negotiations and can help clients assess exposure as the rules take shape.
