The three countries are due to begin a joint review of the pact on July 1, six years after it took effect in 2020. A sunset clause requires them to decide whether to extend the agreement for another 16 years, leave it under annual review, or let it lapse in 2036.
The United States and Mexico concluded their first bilateral round of talks late this month, with negotiators focused on narrowing the US trade deficit and shoring up American supply chains. Automotive rules of origin, steel and aluminum, and economic-security concerns dominated the agenda.
According to the Wall Street Journal and other outlets, US negotiators are weighing a requirement that at least 50 percent of automotive parts and materials be US-made, and are considering lifting the existing 75 percent North American content threshold for duty-free treatment to about 82 percent.
For Korean suppliers that built plants in Mexico to tap lower labor costs, a binding US-content rule would force a costly overhaul of sourcing. Hyundai Mobis supplies parts from its Nuevo León plant to Kia's Pesqueria factory, while SL runs a San Luis Potosí facility capable of producing up to one million headlamp modules a year.
The Korea Automotive Technology Institute, in a February report, said the United States holds a structural advantage in the talks as the region's largest market and the top export destination for Canada and Mexico, leaving each carmaker's burden to hinge on its US production footprint and local sourcing.
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