Mexico reached a record share of the U.S. automotive import market in 2021, according to data from the Department of Commerce (DOC).
Mexico's automotive exports to its northern neighbor totaled 128.622 billion dollars in 2021, an increase of 13.9% at an annual rate.
The United States represents the largest automotive import market in the world and Mexico and Canada are among its main suppliers.
Foreign purchases by the U.S. automotive industry from around the world totaled 348.347 billion dollars in 2021, an 11.8% year-over-year increase.
With this, Mexico's market share was 36.9%, its all-time high, up from the 36.2% it achieved in both 2019 and 2020.
As part of the context change, effective as of mid-2020, the Treaty between Mexico, the United States and Canada (T-MEC) contains new rules of origin for motor vehicles, which require a specific amount of North American content in the final vehicle.
The T-MEC raises regional content value requirements to 75% for automobiles, up from 62.5% under the North American Free Trade Agreement (NAFTA, T-MEC's predecessor).
But shortly after the inception of this new agreement, Mexico and Canada have already initiated a dispute settlement panel against the United States, arguing that their common neighbor nullifies or undermines the benefits they expected to receive from the T-MEC, with the U.S. government's interpretation of the automotive industry's rules of origin.
In parallel, the Office of the United States Trade Representative (USTR) is soliciting public comments on trade in automotive products under the T-MEC, including the implementation of the agreement's controversial auto rules of origin.
This consultation comes as USTR conducts a review of T-MEC auto trade and prepares a report to be submitted to the House Ways and Means and Senate Finance committees by July 1.
The course and outcome of the case are crucial for Mexico, due to the importance of its automotive industry in industrial production.
For now, however, Mexican automotive exports to the United States did not exceed pre-Covid-19 pandemic levels, placing last year's amount 5.9% below 2019.
Also, the T-MEC requires that at least 70% of a producer's steel and aluminum purchases originate in North America.
In addition to the above, for the first time in a trade agreement, wage requirements stipulate that 40-45% of North American auto content must be made by workers earning at least $16 per hour.
In order to give vehicle manufacturers time to adjust to these new requirements, the T-MEC provides for an alternative phasing regime that allows producers to gradually comply with the regional content value levels for up to five years before meeting the standard requirements.
Mexico's automotive exports to its northern neighbor totaled 128.622 billion dollars in 2021, an increase of 13.9% at an annual rate.
The United States represents the largest automotive import market in the world and Mexico and Canada are among its main suppliers.
Foreign purchases by the U.S. automotive industry from around the world totaled 348.347 billion dollars in 2021, an 11.8% year-over-year increase.
With this, Mexico's market share was 36.9%, its all-time high, up from the 36.2% it achieved in both 2019 and 2020.
As part of the context change, effective as of mid-2020, the Treaty between Mexico, the United States and Canada (T-MEC) contains new rules of origin for motor vehicles, which require a specific amount of North American content in the final vehicle.
The T-MEC raises regional content value requirements to 75% for automobiles, up from 62.5% under the North American Free Trade Agreement (NAFTA, T-MEC's predecessor).
But shortly after the inception of this new agreement, Mexico and Canada have already initiated a dispute settlement panel against the United States, arguing that their common neighbor nullifies or undermines the benefits they expected to receive from the T-MEC, with the U.S. government's interpretation of the automotive industry's rules of origin.
In parallel, the Office of the United States Trade Representative (USTR) is soliciting public comments on trade in automotive products under the T-MEC, including the implementation of the agreement's controversial auto rules of origin.
This consultation comes as USTR conducts a review of T-MEC auto trade and prepares a report to be submitted to the House Ways and Means and Senate Finance committees by July 1.
The course and outcome of the case are crucial for Mexico, due to the importance of its automotive industry in industrial production.
For now, however, Mexican automotive exports to the United States did not exceed pre-Covid-19 pandemic levels, placing last year's amount 5.9% below 2019.
Also, the T-MEC requires that at least 70% of a producer's steel and aluminum purchases originate in North America.
In addition to the above, for the first time in a trade agreement, wage requirements stipulate that 40-45% of North American auto content must be made by workers earning at least $16 per hour.
In order to give vehicle manufacturers time to adjust to these new requirements, the T-MEC provides for an alternative phasing regime that allows producers to gradually comply with the regional content value levels for up to five years before meeting the standard requirements.
