Impact of the United States-Mexico-Canada (USMCA) Free-Trade Agreement on the Automotive Sector in Mexico

The article aims to analyze the changes in the free trade agreement of the United States, Mexico, and Canada (USMCA) for the automotive industry, explaining the origin and impact on light vehicle production in Mexico. The new rules affect the drivers of location decisions for companies and positively influence the growth rate of the automotive industry in the region, but unevenly for the countries and companies involved. The regional content value of each automobile assembled in Mexico and sold in the United States in 2020 is analyzed to understand the dynamics of competition and protectionism. There is a strategy to increase automotive manufacturing in the region, especially in the United States. The agreement promotes import substitution, increasing the regionalization of the supply chain. German and Asian carmakers producing in Mexico will need more adjustments. Keywords: Automotive Industry, USMCA, industry relocation, rules of origin, protectionism

Automotive industry · Business · Comparative advantage · Competition (biology · Economics · Free trade · Free trade agreement · Global value chain · International economics · International trade · Production (economics · Protectionism · Relocation · Supply chain · Business, Innovation, and Economy · Engineering · Marketing

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