Auto industry representatives on Wednesday welcomed the U.S.-Mexico-Canada Agreement's rules of origin despite the challenges they said some automakers will face in transitioning from the North American Free Trade Agreement. USMCA, which entered into force on July 1, requires that automakers clear higher content thresholds to benefit from duty free treatment in the region. The agreement raised the regional value content requirement from 62.5 percent under NAFTA to 75 percent. USMCA also includes a novel labor value content rule that says 40 to 45 percent of a vehicle must be made by workers earning at least $16 per hour. Further, the deal says at least 70 percent of a producer's steel and aluminum must be sourced from North America.
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