50% US-made components in automobiles would become mandatory under a proposed USMCA rule change, sources say. The Trump administration plans to require half the dollar value of parts and materials in cars to originate from the U.S. to qualify for lower tariffs, a significant shift from the current North American content rule. This move aims to bolster domestic manufacturing but could raise costs for automakers reliant on cross-border supply chains.

The change reflects broader efforts to protect U.S. industry post-pandemic, according to people familiar with the plans. Currently, USMCA mandates 75% North American content but allows parts from Mexico or Canada without U.S. origin restrictions. Automakers like Ford and GM, which source heavily from Mexico, may face higher compliance costs. Industry analysts warn the rule could disrupt existing trade dynamics, particularly as Mexico remains a key hub for auto assembly. The administration’s focus on U.S. content aligns with longstanding protectionist rhetoric but lacks concrete timelines or enforcement mechanisms yet.

The proposal’s impact hinges on how it’s implemented. A $2.1 billion estimated annual compliance cost for automakers underscores the financial stakes, per industry estimates. Critics argue the rule could push manufacturers to relocate production to the U.S., potentially straining labor markets there. Supporters, however, see it as a way to reduce trade deficits and create jobs. With negotiations ongoing, the final rule’s scope and deadlines remain unclear. What’s certain is that this shift could redefine North American automotive trade for years, forcing companies to reevaluate global supply chains.