What Happened: The United States is reportedly planning to establish a retroactive penalty system for automakers that fail to comply with rules stipulated in the United States-Mexico-Canada Agreement (USMCA) after its six-year adjustment period, according to a White House official, Law360 reported April 18.
Why It Matters: Although the details of the proposed mechanism remain unclear, the White House may be attempting to apply tariffs to car sales during the grace period that do not meet USMCA rules of origin.
Background: The U.S. Congress has yet to approve the USMCA and has thus far refused to introduce it. A recent report by the U.S. International Trade Commission suggests that the agreement would have a small but positive impact on U.S. gross domestic product and jobs growth once fully implemented.
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