The Big Three US automakers have expressed serious concerns over the Trump administration’s proposal to tighten automotive rules of origin under the United States-Mexico-Canada Agreement (USMCA). Each company estimates the changes would generate at least $2 billion (approximately ¥320 billion) in additional annual costs, potentially eroding their competitiveness against Japanese, South Korean, and European rivals. The automakers plan to convey their concerns directly to the administration.
US automakers are already grappling with the impact of tariffs imposed since last year on steel, aluminum, auto parts, and finished vehicles imported from Mexico and Canada. Against this backdrop, the administration’s proposal to tighten rules of origin emerged ahead of trade consultations with the Mexican government scheduled for next month.
The most contentious element is a requirement that vehicles contain at least 50% US-made parts to qualify for tariff preferences. Additionally, the administration is considering raising the North American regional content requirement from the current 75%. According to internal estimates from two major US automakers, these requirements would impose at least $2 billion in additional annual costs on each of the Big Three, layered on top of existing tariff-driven cost increases.
The US Trade Representative (USTR) did not respond to requests for comment.
Tariff burdens already squeezing operating profits
Tariff-related costs for the Big Three have already reached severe levels. General Motors (GM, NYSE: GM) projects total tariff-related costs of $2.5 billion to $3.5 billion (approximately ¥400 billion to ¥560 billion) this year, potentially exceeding 20% of operating profit. Ford Motor (NYSE: F) estimates a net tariff burden of approximately $1 billion (approximately ¥160 billion) this year. Stellantis (NYSE: STLA) faces similar pressures.
Projected tariff-related costs for each company are as follows:
Company2026 Tariff-Related Cost OutlookImpact on Operating ProfitGeneral Motors$2.5–3.5 billion (approx. ¥400–560 billion)Could exceed 20% of operating profitFord MotorApprox. $1 billion (approx. ¥160 billion)Recorded as net burdenStellantisNo specific figure disclosedFacing similar pressures
Note: Figures based on company disclosures and reporting from sources familiar with the matter. Stellantis has not disclosed a specific amount.
Ford shifts Lincoln production from China to the US
In a move signaling commitment to US manufacturing, Ford announced on the 12th that it will relocate production of Lincoln models destined for the US market from China to US plants, citing the Trump administration’s tariffs as the primary factor.
Ford CEO Jim Farley acknowledged in an interview with Reuters that he may have initially underestimated the administration’s determination to expand US auto production, saying, “We realized quickly. ‘This requires transformation.'” Ford already produces a higher proportion of vehicles sold in the US domestically than its Detroit rivals.
Commerce Secretary Howard Lutnick said in a joint interview that he hopes more automakers will follow Ford and GM in moving plants to the US, stating, “We’ve been working to steer things in the right direction.”
“Uneven playing field” versus Japanese, South Korean, and European rivals
The Big Three’s greatest frustration centers on the tariff disparity with Japanese, South Korean, and European competitors. The American Automotive Policy Council (AAPC), which represents Ford, GM, and Stellantis, points out that vehicles exported to the US from Japan, South Korea, and Europe face only a flat 15% tariff, while US automakers pay approximately 25% on vehicles imported from Mexico and Canada.
GM CEO Mary Barra said during the company’s July earnings call, “When I look at the tariff rates applied to European, Japanese, and Korean manufacturers, we are focused on ensuring American automakers can compete and win.”
One US auto industry executive noted that the Trump administration reached trade agreements with South Korea and Japan relatively quickly because those governments were able to advocate for their domestic auto industries within broader national security trade negotiations. US automakers lack the same negotiating leverage, the executive lamented: “There’s no president or prime minister who can call Trump directly on our behalf.”
US and Mexican officials are scheduled to hold their fourth round of trade consultations next month. Canadian trade authorities are also in discussions with US counterparts this week to avert new tariffs on Canada set to take effect next week.
Structural impact of stricter rules of origin
The Big Three’s supply chains have been built over decades across the US, Mexico, and Canada. Tightening rules of origin could shake the foundation of this integrated North American production model. Each company will be forced to reconfigure production locations and reassess parts sourcing networks, with costs likely to be passed on to vehicle prices.
GM has indicated that vehicles using more US and North American parts “should be favored over those that do not,” while expressing optimism about the administration’s negotiating progress. Stellantis commented that it is working with all three governments “to ensure vehicles can be produced and sold at prices consumers across the region can afford.”
Jennifer Safavian, president of Autos Drive America, the industry group representing foreign automakers with US operations such as Toyota and Hyundai, said the USMCA trade consultations are important for all automakers, stating, “Our US- and North American-built vehicles use substantial amounts of US-made parts, and international automakers are also being harmed by the current trade environment with Mexico and Canada.”
Detroit automakers support the policy goal of strengthening US manufacturing but worry that rapid increases in rules of origin will further burden an industry already struggling with billions of dollars in tariff costs. As Asian and European competitors continue to enter the US market with relatively lower tariff burdens, if the Trump administration fails to balance domestic production goals with automakers’ cost burdens, the price will ultimately be paid by American consumers.