Collision repair shops that source OEM and certified aftermarket body parts from Mexico and Canada face continued uncertainty over tariff treatment after the United States declined to renew the U.S.-Mexico-Canada Agreement (USMCA) in its current form. The announcement came July 1, following the agreement's first mandatory six-year joint review, according to a statement from the Office of the U.S. Trade Representative, required under Article 34.7 of the pact, according to a legal analysis from law firm White & Case.
"The United States did not agree to renew the USMCA in its current form. As a result, the USMCA is not renewed," U.S. Trade Representative Jamieson Greer said in the statement. Greer said the United States would continue engaging with Mexico and Canada on trade deficits and what the administration described as shortcomings in the agreement.
The outcome adds to a set of tariff-related developments collision shops have been tracking heading into 2026, including rising parts costs tied to tariff pressure and potential Section 232 tariff expansion to additional collision parts.
Third round of talks set for July 20
The United States and Mexico are scheduled to hold a third round of bilateral negotiations the week of July 20 in Mexico City, USTR announced. A first round held in May covered automotive rules of origin, steel and aluminum, and economic security, according to a USTR statement on that round.
A second round held June 15-17 in Washington added discussions on agriculture, labor and the environment alongside continued rules-of-origin talks, according to reporting from Mexico Business News. Canada has not been included in these bilateral rounds, though Canadian officials participated in the July 1 trilateral review meeting, according to the Brownstein alert.
Auto content rules central to the review
A central issue in the USMCA joint review is the agreement's regional value content requirement, which sets the minimum share of a vehicle's value that must come from North America to qualify for duty-free treatment. That threshold is currently 75%, up from 62.5% under NAFTA, according to a USTR fact sheet on autos and auto parts.
U.S. negotiators have proposed raising that threshold to 82% and adding a requirement that at least 50% of a vehicle's content originate specifically in the United States, according to policy analysis from APCO Worldwide and reporting from The Globe and Mail.
Under USMCA's current rules of origin, body and chassis components are classified as core parts, subject to the same 75% regional value content threshold as engines, transmissions and axles. Complementary parts, including plastic interior panels, windshield wipers and catalytic converters, are subject to a 65% threshold, according to a USITC report on USMCA automotive rules of origin.
Mexico is the fourth-largest producer of auto parts globally, according to a 2024 country commercial guide from the U.S. International Trade Administration. Mexico's auto parts exports were 86.9% U.S.-bound between January and November 2025, according to data from Mexico's National Auto Parts Industry Association reported by WardsAuto.
