Foreign automakers have warned the Trump administration that if the free trade agreement between the US, Mexico and Canada is not renewed or weakened, they are considering withdrawing their cheapest models from the US market, The Wall Street Journal wrote.
It is an agreement known as the USMCA, which replaced the earlier NAFTA agreement and creates a free trade zone between the three North American states.
Cars like the Honda Civic or Toyota Corolla are manufactured in the USA, but they rely on parts from all three countries. President Trump signed the agreement in 2020 and provided duty-free treatment to vehicles made mostly from American, Mexican or Canadian parts. The government will review the agreement this year.
In the spring of 2025, however, Trump imposed 25 percent tariffs on all non-American content of vehicles that would previously fall under the USMCA agreement. In addition, Trump’s team considered canceling the agreement or splitting it into two separate contracts.
Automobile companies complain that the tariffs put them at a disadvantage compared to affordable models from Japan and South Korea. They are subject to a 15 percent duty, but their production tends to be cheaper.
“Tariffs are killing our affordable cars,” Nissan Americas chairman Christian Meunier emphasized, adding that the renewal of the USMCA agreement could mitigate financial losses.
White House spokesman Kush Desai, on the other hand, said that car companies that want to sell on the American market must move production to the United States. “The administration is rolling out the red carpet to support this transition with deregulation, tax cuts and other pro-investment policies,” he said.
The average price of a new car in the USA is around 50 thousand dollars, or roughly 1.04 million crowns, which is too high for many Americans. More affordable options include the Nissan Sentra made in Mexico starting at $22,600 or the Hyundai Venue imported from Korea for $20,550.
