WASHINGTON (Reuters) - The new U.S.-Mexico-Canada Agreement on trade will preserve President Donald Trump’s ability to impose threatened 25 percent global tariffs on autos while largely exempting passenger vehicles, pickup trucks and auto parts from Canada and Mexico, a side-letter to the agreement showed on Monday.
FILE PHOTO: Chevrolet Equinox SUVs are parked awaiting shipment by CN Rail next to the General Motors Co (GM) CAMI assembly plant in Ingersoll, Ontario, Canada October 13, 2017. REUTERS/Chris Helgren/File Photo
Should U.S. President Donald Trump impose “Section 232” autos tariffs on national security grounds, Mexico and Canada would each get a tariff-free passenger vehicle quota of 2.6 million passenger vehicles exported to the United States annually.
Pickup trucks built in both countries will be exempted entirely, the side-letter said.
Mexico will get an auto parts quota of $108 billion annually, while Canada will get a parts quota of $32.4 billion annually in the event of U.S. autos tariffs. The quotas are significantly above existing production volumes in each country, allowing for some export growth.
Reporting by David Lawder; Editing by Kim Coghill