Two trade deadlines land within days of each other next week, and both will shape the tariff treatment of imported auto parts that collision repair shops use daily. Bilateral negotiations between the United States and Mexico resume the week of July 20 in Mexico City for a third round of talks tied to the USMCA joint review, and the Section 122 import surcharge expires by statute on July 24.
Auto content rules at center of USMCA Round 3
The July 20 round follows the United States' decision not to renew the USMCA in its current form at the agreement's mandatory six-year joint review on July 1. U.S. negotiators have proposed raising the regional value content threshold for vehicles from 75% to 82% and adding a requirement that at least 50% of a vehicle's content originate specifically in the United States, according to The Globe and Mail. No U.S.-specific content threshold exists under the current agreement.
Canada has not been included in the bilateral rounds. The USMCA remains in force during negotiations and does not expire until 2036, but any changes to the agreement's content requirements would affect what parts qualify for duty-free treatment.
Body and chassis components are classified as core parts under the current rules of origin. They carry the same 75% regional value content threshold as engines and transmissions, according to a USITC report on USMCA automotive rules of origin.
Section 122 surcharge set to expire
The Section 122 surcharge was imposed in February after the Supreme Court struck down the administration's IEEPA-based tariffs. The surcharge applies to most imports but exempts goods already covered by Section 232 tariffs, as well as USMCA-qualifying goods. Section 232 covers finished vehicles and certain auto parts such as engines, transmissions, and powertrain components.
The expiration on July 24 primarily affects parts not covered by those other programs. About 44% of OEM parts used in collision repair are manufactured outside the United States, according to PartsTrader. For non-USMCA parts from countries like Japan, South Korea, and EU members, the expiration could mean a temporary cost reduction if no replacement tariffs take effect first.
The U.S. Trade Representative proposed Section 301 tariffs on June 2 covering 60 countries, with rates of 10–12.5% and auto parts explicitly in scope, according to trade analysis of the proposal. Public hearings concluded July 7–9.
Whether those tariffs are finalized before, on, or after July 24 will determine whether the surcharge's expiration translates into actual cost relief or a rate change under a different authority. Congress is considered unlikely to extend Section 122 beyond its 150-day statutory limit, according to legal analysis from PwC and Skadden.
