The trouble began accumulating long before any renegotiation talks were formally scheduled. Over the past year, the Trump administration rolled out a sweeping series of tariffs that landed hard on North American automotive supply chains — levies on steel and aluminum, on vehicle parts, and on finished cars crossing the borders from Mexico and Canada. Detroit’s three major automakers, General Motors, Ford, and Stellantis, absorbed those costs as best they could, even as executives privately noted that their rivals from Japan, South Korea, and Europe faced a comparatively lighter tariff burden of a flat 15 per cent on exports into the United States.
By the time the administration began floating proposals ahead of a fourth round of U.S.-Mexico trade talks scheduled for next month, the automakers were already operating under significant financial strain. General Motors projected gross tariff-related expenses of between US$2.5 billion and US$3.5 billion for the current year alone — a figure that could represent more than 20 per cent of the company’s operating profit. Ford, for its part, estimated its net tariff hit at roughly US$1 billion for 2025. These were not abstract projections; they reflected real pressure on margins, investment capacity, and the companies’ ability to compete globally.
Into that already difficult environment came a fresh set of demands from Washington. Among the most contentious was a proposal — first reported by Reuters in May — that vehicles contain at least 50 per cent U.S.-made content in order to qualify for lower tariff rates. A separate proposal called for raising the overall North American content threshold above the current 75 per cent level set under the Canada-United States-Mexico Agreement. Executives at two of the Detroit automakers estimated that these requirements, taken together, would add at least US$2 billion in annual costs per company — costs that would compound the tariff burdens already in place.
The U.S. Trade Representative’s office did not respond to a request for comment on those figures. Administration officials have consistently framed their tariff strategy as a mechanism to drive factory investment and job creation inside the United States, and Commerce Secretary Howard Lutnick expressed optimism that more automakers would follow the example already being set by Ford and GM. “We worked together to get it right,” Lutnick said in a joint interview with Reuters.
Ford moved first and most visibly. On Wednesday, the company announced it would shift production of Lincoln models destined for the U.S. market from China to American factories, explicitly citing the Trump administration’s tariffs as the deciding factor. Ford CEO Jim Farley acknowledged to Reuters that the company had perhaps underestimated, early on, just how serious the administration was about reshoring automotive production. “It dawned on us very quickly, ‘Hey, look, we need to make some changes here,'” Farley said. Ford already builds a larger share of its U.S.-sold vehicles domestically than either GM or Stellantis, which gave it a degree of credibility in signalling its commitment to the White House.
Even so, the competitive imbalance with Asian and European automakers continued to rankle. The American Automotive Policy Council, which represents Ford, GM, and Stellantis, pointed in a late-June statement to the structural disadvantage facing domestic producers. GM CEO Mary Barra addressed the issue directly on the company’s July earnings call, saying the company was focused on “making sure that the U.S. automakers are going to be able to compete and win when we look at what the tariff rates are for Europeans, the Japanese and the Koreans.” One senior U.S. auto executive, speaking without attribution, offered a blunt explanation for why South Korea and Japan had secured more favourable terms more quickly: those governments could advocate for their automakers directly, as part of broader national-security-framed trade negotiations. “We don’t have a president or a prime minister who can call up Trump on our behalf,” the executive said.
The concern is not limited to the Detroit companies. Jennifer Safavian, president of Autos Drive America — a trade group representing foreign automakers operating in the United States, including Toyota and Hyundai — noted that international manufacturers with significant North American production footprints are also being harmed by the current trade environment. “Our American and North American-made vehicles use significant amounts of U.S. content and international automakers are also being harmed by the current trade environment with Mexico and Canada,” Safavian said in a statement, underscoring that the stakes of the CUSMA renegotiation extend well beyond the Big Three.
As of this week, Canadian trade officials were meeting with their U.S. counterparts in an effort to head off a new round of tariffs on Canadian goods set to take effect next week — a parallel pressure track running alongside the Mexico negotiations. GM told Reuters that vehicles with substantial U.S. and North American content “should receive better treatment than vehicles that do not,” while Stellantis said it was working with all three governments “to ensure that we can build and sell affordable vehicles across the region.” The fourth round of U.S.-Mexico talks remains scheduled for next month, and Detroit’s automakers intend to make their case clearly: that the administration’s content proposals, however well-intentioned as industrial policy, risk imposing costs that would weaken the very companies they are meant to strengthen.
