The future of North American auto trade that encompasses billions of dollars of investment, thousands of workers and the success of the largest manufacturing sector in the U.S. hinges on one agreement — the USMCA. ¶ The survival of the United States-Mexico-Canada Agreement is uncertain. And an infinite number of changes could result from this year’s negotiations. ¶ The talks will cover rules of origin, labor requirements and even the review schedule itself. ¶ After a year of tariffs, war and disruption, more than anything, auto companies are hoping for stability and clarity through the review of the USMCA. 

“The lack of known trade certainty is like kryptonite,” said Michael Robinet, vice president of forecast strategy for S&P Global Mobility.

But the continentwide pact is a double-edged sword. It could offer consistency and a window into trade policy for years to come. Or it could cast yet more doubt on the future.

Provisions up for review

The auto industry has emerged as a key area of focus for the Trump administration’s review of the USMCA.

The pact has led to about $210 billion in investment in the U.S. auto industry, according to the American Automotive Policy Council, which represents the Detroit 3.

The U.S. trade representative posted a request for comments on Dec. 5, asking for feedback on steel and aluminum purchase requirements, labor value content requirements and the enforcement of the rules of origin, among other topics.

Some stakeholders want changes to accommodate the reality of manufacturing modern vehicles. A 2025 economic impact report from the U.S. International Trade Commission noted that “several parties” have proposed updating the rules of origin to accountfor electric vehicles, autonomous vehicles and other innovations.

Batteries are currently listed as a “core part” that have to meet a 75 percent regional value threshold to avoid duties on the vehicle. That is basically impossible today because so much of the battery’s critical materials are mined outside of North America — especially in China.

Some tests for a part’s origination do not map well to advanced technology such as EVs and AVs.

For example, software may substantially transform a product, but it may not move the needle for the regional value calculation because the hardware makes up the bulk of the cost. Or, software may substantially change the part but not change the tariff classification of the hardware.

“You’re combining super old-school, heavy manufacturing with really new stuff,” said Lynlee Brown, global trade partner for EY. “There’s gonna have to be a little bit of a rethinking. Otherwise, none of these are going to qualify.”

UAW criticism

The renewal process may also address labor unions concerns.

Jason Wade, a UAW representative, testified Dec. 4 in a hearing on the review of the USMCA that the union is seeking “a complete rewrite” of the agreement. The union is calling for the establishment of a“wage floor” rather than the labor value content requirement.

The union said in a Nov. 3 document that “to satisfy the [regional value content] provisions within any durable goods Rules of Origin requirement, workers in the applicable plant would have to be compensated at or above the [labor value content] wage floor for that sector.”

That wage floor would amount to a continentwide minimum wage.

Yet the establishment of a wage floor across North America is unlikely, said Steve Britt, a director in the customs and international trade practice at PwC.

“We may get some level of that concept or something in between, but just coming in and equalizing in Mexico the wage floor to the other two countries, I think is a big challenge,” he said.

Some parts of the industry value chain are hoping for other changes to shore up North American manufacturing.

Brian Raff, a vice president at the American Institute of Steel Construction, testified Dec. 4 that the fabricated structural steel industry is facing “a crisis of circumvention.” He said the industry “has become a conduit for foreign industries to channel subsidized excess steel capacity directly into the United States” despite Section 232 tariffs, which are “incomplete” for derivative products such as screws and pipes.

Both Brown and Britt said that the agreement already has a significant number of provisions meant to prevent circumvention. Greater enforcement or the application of blanket tar-iffs despite North American origin could address the steel circumvention concerns, they said.

How it could change

The USMCA includes 34 chapters and a set of annexes and side letters that together create the trade policies.

The document requires a review every six years, and will sunset after 16 years.

While the review is not formally a renegotiation, Jamieson Greer, the U.S. trade representative, told Congress in December that “the shortcomings are such that a rubber stamp of the agreement is not in the national interest,” which suggests that the U.S. may try to alter the pact.

Those modifications would happen via side letters or annexes. Some may need congressional approval. All three countries would have to agree to the changes.

The countries could also agree to an annual review cycle, whereby the agreement stays but is reviewed each year through 2036.

A yearly review cycle would be disruptive, said Chauncey Mayfield, a partner at Honigman.

“Everything that they negotiated that’s happening today was negotiated years ago.”

Any party can withdraw at any time with six months’ notice. That is not tied to the review but remains on the table for all three parties.