Commenters: End 232 Tariffs on Canada, Mexico, Renew USMCA for 16 Years

Groups such as the U.S. Chamber of Commerce, the United States Council for International Business, the National Foreign Trade Council and newer entrants such as the Coalition for North American Trade all urged the administration to reaffirm the pact for another 16-year term. They also said Section 232 tariffs should be rolled back on goods that meet the USMCA rules of origin.

The Chamber argued that importing lower-cost parts and materials is necessary to keep American manufacturing cost-competitive.

Some "imports are low-value consumer goods that a high-wage economy such as the United States cannot and should not attempt to produce domestically," the group wrote, quoting the president saying that the U.S. is not trying to produce T-shirts and socks.

The Chamber said rules of origin don't need to change, and tightening auto rules would be burdensome. But if the administration negotiates changes to ROO, "any changes should be implemented in a manner that ensures the rules are clear, implementable, minimize trade disruptions, and maintain North American competitiveness. Additionally, the efficacy of any new provisions should be reviewed periodically, with such processes including comprehensive impact assessments and opportunities for industry engagement."

As many commenters did, the Chamber complained about various trade irritants with Mexico and Canada, but also said the U.S. is not complying with the pact. The Section 232 tariffs violate the core commitment to maintain duty-free trade in most products, it said, and saying that Canadian and Mexican "steel, aluminum, autos, commercial vehicles, copper, and lumber, and their derivatives" threaten to impair national security is wrong. Canada is by law an integral part of the U.S. defense industrial base, the Chamber noted.

"The U.S. tariff on Canadian aluminum is a vivid case in point: Replacing Canadian aluminum with domestic production -- as is the apparent objective of the present 50% tariff -- would take decades, cost tens of billions of dollars, and require additional electricity production equivalent to that of the state of Nevada."

The Coalition for North American Trade, led by former House Ways and Means Committee Chairman Kevin Brady, said there should be no tariffs on any qualifying products. "Undermining this framework would be a gift to geopolitical competitors like China," he wrote.

He said that the three countries have complementary strengths, with upstream inputs from Canada, high-volume assembly from Mexico, and high-value design and advanced manufacturing in the U.S.

The Center for Strategic and International Studies noted that the U.S. has yet to comply with the automotive rules of origin dispute panel ruling, which shows that the U.S. sometimes chooses political considerations over what's best for manufacturers.

"If the agreement were to weaken or lapse, North American manufacturing, especially in the automotive, aerospace and agricultural sectors, would suffer from higher costs and reduced efficiencies," CSIS said. "This would give an opening to rivals like China, which already competes aggressively in key sectors."

"Each day of uncertainty leading up to the agreement’s review and after July 1, 2025, acts as a silent tax on competitiveness, job creation, and trust in the region’s economic governance," the group wrote.

It did recommend some changes to the pact, including an agreement to eliminate tariffs and align rules for mining and processing critical minerals, and to create "a digital 'North American product passport'" to track components "in real time, protecting U.S. industries from unfair trade practices and forced labor."

Similarly, the Baker Institute wrote that without a robust USMCA, the U.S. wouldn't be able to compete with China or Southeast Asian countries.

The think tank said that if the U.S. doesn't end Section 232 tariffs on Canada and Mexico, "the aim should in our view, be to maintain a high level of duty-free preferential treatment, either through tariff-rate quotas or other means."

It agreed that critical minerals production should be addressed, and the terms should protect against government seizure of the mines or processing facilities.

"We also agree with experts throughout the United States that steps should be taken to make it difficult or impossible for Mexico and, to a lesser extent, Canada, to be used as a backdoor entrance to the U.S. market. Chinese investment in Mexico should be monitored. This is essential with regard to 'connected vehicles,' chips, medical supplies and other products that raise national security concerns."

Many groups asked USTR to prioritize trade facilitation in its review.

The United States Council for International Business, along with NCBFAA, AAEI, NAFTZ, and the new Restoring American Dominance, led by a former special assistant to President Donald Trump, said the drawback restrictions under USMCA discourage domestic manufacturing. "These restrictions are extremely complex, involving time-consuming calculations, verification, and administration for both US Customs and Border Protection (CBP) and our members," USCIB wrote.

USCIB also said Mexico should have standardized guidance for certificates declaring USMCA compliance.

"This leads to uneven application of the standards in Mexico that causes delays and creates added work for certifiers," USCIB wrote.

Several groups complained about a new customs law in Mexico, which the NCBFAA said shifts "responsibility for errors in customs declarations, tariff classification, valuation, and regulatory compliance even when those errors stem from information provided by importers and for which the broker has no direct knowledge."

The American Association of Exporters and Importers argued that substantial transformation is more objective than tariff shift rules. It said, ideally, an ROO would allow tariff shift, regional value content (RVC) or processing rules to qualify.

It said ROO based on foreign ownership in the supply chain would be unworkable. "In addition to the extra cost and due diligence this will impose on U.S. businesses, it creates additional burden for CBP, carriers, and freight forwarders. If ownership or derivative ownership information is not provided within the appropriate time frame, then many shipments will be left abandoned at ports, resulting in increased government and port costs, and shipper detention and demurrage charges," AAEI wrote.

The trade group said a tri-national classification and ROO verification review team "would promote consistency and collaboration in trade compliance."

AAEI also complained about Canada's requirement of a wet-ink signature for powers of attorney and what it called Mexico's rigid style of enforcement.

The National Customs Brokers & Forwarders Association of America called for mutual recognition of trusted trader partners. Like many, it said Section 232 tariffs violate the USMCA pact. They should not apply to USMCA qualifying goods, the group said, but if the U.S. continues with that approach, companies should be able to reduce their duty exposure one-for-one with proof of purchases of U.S. materials and components, they argued.

NCBFAA argued for the primacy of the tariff shift. "These rules are a proven, precise, and predictable way to determine non-preferential access. The alternative case-by-case adjudication process method being used at this time relies primarily on subjective tests articulated in often obscure judicial precedent and past administrative rulings. That method is unnecessarily complex, unpredictable, expensive, and time-consuming for Customs Administrations, importers, and brokers."

The group called on Mexico to allow non-resident importers, as Canada and the U.S. do. It said if it doesn't, the ability to have non-resident Mexican importers may end.

NCBFAA wrote, "The time has come to mandate a single window platform implemented for all government agency import review, verification, and release requirements."

It suggested that Canadian and U.S. border officials work together, as Mexican and CBP officials have done on the Mexican border.

The Business Roundtable noted that since USMCA took over from NAFTA, "Canada and Mexico have invested $775 billion in the United States and there has been a 50 percent increase in two-way trade, totaling $1.9 trillion in goods and services. A quarter of total U.S. trade comes from Canada and Mexico, larger than any other trading bloc."

The BRT, among others, noted that Mexico is not giving enough notice before changing rules. "Mexico routinely makes major changes to its customs rules with no implementation period, which creates operational disruptions."

The group complained that Mexico is inappropriately using reference prices in dumping cases, "which results in importers having to declare artificially high customs values for these products."

The group asked USTR to push the Canada Border Services Agency to improve its CARM system. "The transition to CARM has imposed administrative and financial burdens, including requirements for importers to register, manage their own accounts, and post bonds directly with CBSA. This is creating inefficiencies and bottlenecks for U.S. exporters, disrupting established broker processes, and adding significant supply chain costs. Frequent technical failures and billing inaccuracies have further delayed shipments and increased compliance risks."

It said that CARM should allow licensed customs brokers to make blanket corrections to customs entries.

The Business Coordinating Council of Mexico argued that dispute settlement mechanisms should be strengthened "to ensure timely enforcement of the obligations."

The American Chamber of Commerce in Mexico agreed, calling for "mandatory deadlines and automatic compensation mechanisms in cases of non-compliance."

AmCham Mexico also asked for maximum timelines for sampling and clearance at customs agencies, and called for a labor value content requirement for the household appliances sector.

It said that the tighter auto rules of origin "promote regional production and fair labor standards, they have also created operational complexity and interpretive inconsistencies, notably regarding the treatment of core parts, intermediate inputs, and the accumulation method," which was the subject of the panel that the U.S. lost, but has not complied with.

The Center for North American Prosperity and Security argued that the trade deficit with Canada helps the U.S., since two-thirds of it represents inputs for the U.S. economy.

It also argued against Section 232 tariffs, saying that almost 50% of Mexico's products would be covered by the various actions. "This questions the span, scope, and spirit of the USMCA, and its future."

The think tank called for improved customs enforcement, saying that Canada cannot search even 1% of goods entering its ports. "A minimum percentage of container shipments checked for compliance against anti-dumping regulations is necessary."

The National Association of Foreign-Trade Zones cited a 2023 report from the International Trade Commission that noted that the rules on FTZs in USMCA put U.S. manufacturers operating in FTZs at a competitive disadvantage.

Moreover, goods manufactured in an American FTZ cannot qualify for duty-free status "even if all other rules of origin for preferential qualification are met."

Although most broad groups argued against a revision to USMCA to change manufacturing integration patterns, Rethink Trade wrote that USMCA hasn't changed the longtime trend under NAFTA of "race-to-the-bottom job offshoring by firms eager to exploit Mexico’s low wages and lax environmental enforcement."

The group said that Mexican manufacturing wages are 40% lower than in China.

"The USMCA review and renegotiation must secure better labor rights enforcement, direct measures to raise wages in Mexico, and tighten USMCA rules of origin to minimize third-country content entering the U.S. market duty-free via USMCA. As well, the United States (or, even better, the three USMCA countries) must raise their Most Favored Nation tariff rates on key manufactured goods and aspects of their supply chains so that paying inconsequential tariffs for access into the U.S. market for goods made in Mexico without complying with USMCA rules is no longer a viable strategy."

It noted that USMCA instituted tighter ROO for autos, which represent 18% of the goods trade in the pact, but said that RVC should go up "for many more sectors beyond autos as well as further increases in the auto sector to drive investment in North American supply chain manufacturing."