[Edaily Reporter Seong Ju-won] During negotiations to review the U.S.-Mexico trade agreement, Mexico brought a key grievance to the surface: that its automobile tariff rates are actually higher than those of South Korea and Japan.

Bloomberg reported on the 9th (local time), citing Mexican government documents, that the average tariff on Mexican-made cars exported to the U.S. stands at 18.75%. This is about 4 percentage points higher than the 15% cap on auto tariffs the U.S. agreed to in separate trade deals with South Korea and Japan last year. Based on a $50,000 (approximately 76.24 million won) vehicle, a tariff of $9,375 is imposed on Mexican-made cars, while a tariff of $7,500 is imposed on Korean and Japanese-made cars, resulting in a difference of $1,875 (approximately 2.86 million won).
◇“But there aren’t even rules of origin for South Korea”
The crux of the issue lies in the structural asymmetry inherent in the United States-Mexico-Canada Agreement (USMCA).
Under the USMCA, for a Mexican-made car to qualify for preferential tariffs, at least 75% of its parts must be North American-made, and to prove this, up to 18,000 parts must be analyzed individually. At an event last month, Mexican Economy Minister Marcelo Ebrard criticized the situation, stating, “The U.S. does not apply origin rules to South Korea and Japan, so they can use whatever parts they want.” Automotive industry officials reported that the costs of complying with these complex regulations alone result in an additional burden of about 3%.
The situation is even harsher for vehicles that fail to meet USMCA regulations. With a 25% base tariff plus an additional 2.5% Most-Favored-Nation (MFN) tariff, the structure effectively makes it impossible to compete with South Korean and Japanese vehicles.
Jamison Greer, the U.S. Trade Representative (USTR), told Mexican negotiators, “We understand that Mexican-made vehicles should be in a more advantageous position,” and indicated that alternatives are being explored. However, Bloomberg reported that he added a caveat, stating that he did not fully agree with the data provided by the Mexican side.
◇ 15% Tariff Cap on $900 Billion in Korean and Japanese Investments
The 15% tariff benefit granted to South Korea and Japan was secured in exchange for large-scale investment commitments to the U.S. Last year, the two countries secured a 15% cap on auto tariffs in return for pledging a combined $900 billion (approximately 1,372 trillion won) in investment in the U.S. Unlike the USMCA, there are no complex rules of origin.
In contrast, Mexico is continuing negotiations within the existing framework of the USMCA. This agreement, which took effect in 2020, includes a mandatory review clause six years later. Although the deadline of July 1 is fast approaching, negotiations are facing difficulties.
The automotive industry is a key sector, accounting for 4.5% of Mexico’s gross domestic product (GDP). Mexican President Claudia Sheinbaum has recently begun supporting the industry through deregulation and tax incentives, but the issue of the tariff structure requires a fundamental solution.
◇ Asian Automakers Reconsider Production in Mexico
Amid this situation, some Asian automakers are reevaluating the viability of their production bases in Mexico. Nissan announced the suspension of production at its Compás plant in Mexico last October. A spokesperson for Nissan Americas acknowledged, “It is true that under the current system, the tariff burden on vehicles assembled in Mexico may be higher than that on imported vehicles from other regions.”
Some models with a high percentage of U.S.-assembled parts fare relatively better. Based on the 2025 model year standards of the U.S. Automobile Labeling Act (AALA), the North American content ratio for the #Kia EV6 is 80%, and for the Honda Ridgeline TrailSport, it is 75%. However, luxury brands such as the Audi Q5 (2%) and the Mercedes-Benz GLB SUV (0%) have extremely low North American content ratios, making them highly vulnerable to the impact of tariffs.
Diego Marroquin, a researcher at the Center for Strategic and International Studies (CSIS), suggested that while “it is difficult to completely eliminate or lower tariffs,” “a system that exempts vehicles from tariffs if they meet minimum requirements for the percentage of U.S.-made parts or labor could be a realistic compromise.” He warned, “The current tariff structure is unsustainable,” adding, “If nothing changes, factory closures will continue in both Mexico and Canada.”
Ultimately, the outcome for Mexican-made cars in the USMCA renegotiation depends on the decision of U.S. President Donald Trump. Trump maintains that tariffs, which generate billions of dollars in revenue, protect the United States, so it remains uncertain whether Mexico’s demands will be accepted.