U.S. panel hears testimony on CUSMA auto rules of origin

The U.S. International Trade Commission held a public hearing in Washington on Oct. 14, 2026, on how the automotive rules of origin in the Canada-U.S.-Mexico Agreement (CUSMA, known in the U.S. as USMCA) are working, as Canadian carmakers and parts suppliers wait to learn what Washington wants changed.

The hearing is part of a report due to the president and Congress by July 1, 2027, and it comes while Canada and the United States remain in a tariff dispute and formal trade talks are suspended.

Witnesses told the commission that any update to the auto rules must address both the proliferation of electric vehicles and protections for U.S. workers, MLex reported on Oct. 14. The report did not name the witnesses, and the full testimony was behind a paywall.

The rules of origin set how much of a vehicle or part must be made in North America for it to cross the border duty-free. They cover passenger vehicles, light and heavy trucks and certain parts, according to the commission’s notice of the investigation, which it opened on Feb. 19, 2026 (Investigation No. 332-608).

The study is the third of five biennial reports required under the CUSMA implementation law, which run until 2031. The commission said it will examine effects on U.S. gross domestic product, trade, employment, wages, investment, prices and consumers, along with whether the rules remain relevant given technological change. It also plans a survey of industry.

The public record is still open. Post-hearing briefs are due Oct. 21, and all other written submissions are due Nov. 2, the commission said.

The commission’s previous report, released in 2025, found that electric vehicles had created divergences between tariff classifications and the rules of origin, Supply Chain Dive reported in March. It said most producers continued to see the rules as relevant, but some said they may become less so. The commission also said producers “raised concerns about the cost or availability of lithium-ion batteries produced in USMCA countries.”

Micah Burbanks-Ivey, an associate attorney at Holland & Knight, told Supply Chain Dive the commission’s report “could critically shape some of these rules of origin,” and said he was particularly interested in how it treats critical minerals, batteries and semiconductors for advanced and electric vehicles.

For Canada, the stakes are large. Figures cited by Hashtag Investing in a Sept. 30 report put the share of Canadian-made vehicles exported to the U.S. at more than 90 per cent, and the auto sector’s direct manufacturing workforce at about 125,000 people. Those figures have not been independently verified by Canada News Media.

The same report said the U.S. declined at the July 1 joint review to renew CUSMA in its current form, so the agreement stays in force but moves to annual reviews. Prime Minister Mark Carney suspended formal talks on Aug. 21, according to the report, and the U.S. imposed 50 per cent tariffs on $27.6 billion of Canadian goods the next day. Canada and the U.S. disagree on why the talks failed, with U.S. Trade Representative Jamieson Greer saying Canada walked away from a near-final deal. Canada News Media has reported on the July review and its aftermath.

Pressure on Canadian industry is already building elsewhere. Canada News Media has also reported that U.S. duties on Canadian lumber are near 35 per cent, and that Melanie Joly warned Stelco’s owner of a forced sale over layoffs.

The commission’s report is a fact-finding study for the president and Congress and does not itself change the rules.

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Via MLex and Supply Chain Dive, with details from the U.S. International Trade Commission.