Browse
Log in / Register
Share
April 13, 2025 – Stellantis North America Chief Operating Officer Mark Longley has poured cold water on hopes that the next iteration of the United States–Mexico–Canada Agreement (USMCA) will restore the zero-tariff trading environment that underpinned the original NAFTA. Speaking at a private industry roundtable in Detroit this week, Longley argued that the geopolitical and economic landscape has shifted so dramatically that a return to completely duty-free cross-border trade is “unrealistic” for the foreseeable future.
Longley’s blunt assessment comes as Washington, Mexico City, and Ottawa prepare for the mandatory joint review of the USMCA, which is set to begin in 2026. The agreement, signed in 2020, replaced NAFTA with stricter rules of origin and higher regional value content requirements, but it did not eliminate tariffs entirely—certain sectors, such as steel and aluminum, remain subject to duties under Section 232. Now, with the Biden administration maintaining a tough stance on trade enforcement and Congress increasingly protective of domestic manufacturing, the chance of sweeping tariff elimination is remote.
“We’re not going back to the days of zero tariffs,” Longley said. “The conversation has moved from ‘how low can we go’ to ‘how do we manage complexity and cost.’ The supply chain is no longer a simple North American loop; it’s a global web, and tariffs are a tool being used more aggressively than ever.”
Longley’s remarks carry weight because Stellantis, the parent company of Jeep, Ram, Dodge, Chrysler, and Fiat, is one of the largest automakers in North America, with extensive factories in all three countries. The company’s supply chain is deeply integrated across the continent, and any tariff increase would directly hit its bottom line. The executive’s skepticism reflects a broader industry consensus that the USMCA 2.0 will likely focus on modernization—such as digital trade and electric vehicle (EV) battery supply chains—rather than tariff reduction.
A Shift in the Trade Narrative
The original NAFTA, enacted in 1994, created a tariff-free zone for goods traded between the U.S., Canada, and Mexico. That framework was credited with fueling a boom in cross-border automotive production. However, the USMCA introduced new rules requiring 75% of vehicle content to be made in North America (up from 62.5%) and mandated that 40-45% of auto content be produced by workers earning at least $16 per hour. These changes already tilted the playing field, and the pending review will determine whether to tighten or relax those rules.
Longley’s view is that the era of free trade is being replaced by “managed trade,” where governments use tariffs, quotas, and incentives to shape industrial policy. The U.S. Inflation Reduction Act, for example, offers EV tax credits only for vehicles assembled in North America with batteries made from minerals sourced from free-trade partners. This effectively creates a new layer of tariff-like barriers.
“The zero-tariff concept was a product of a different time,” explained Dr. Maria Santos, a trade policy expert at the Peterson Institute for International Economics, who was not involved in the roundtable. “Today, the U.S. government views tariffs as a legitimate tool to protect national security, promote domestic manufacturing, and push back against China. You’re not going to see a wholesale elimination of those tools in the USMCA review.”
Industry Ripple Effects
The Stellantis executive’s cautionary note comes as rival automakers are also recalibrating their expectations. Ford Motor Company has publicly stated that it expects the USMCA review to focus on enforcement rather than tariff reduction, while General Motors has been lobbying for stronger rules on battery content to ensure a level playing field with Chinese automakers. Unlike Tesla, which largely builds its vehicles in the U.S. and exports to Canada and Mexico, the Detroit Three rely heavily on cross-border parts movement.
If tariffs remain in place or even increase, the cost of producing vehicles in North America could rise by 2% to 5% per vehicle, according to a 2024 study by the Center for Automotive Research. That would put pressure on automakers to either raise prices for consumers or absorb the costs, squeezing margins at a time when EV investments are already straining budgets.
Longley suggested that Stellantis is already preparing for a scenario where tariffs are not reduced. The company has been accelerating its battery plant construction in the U.S. and Canada, aiming to localize more of the supply chain. “We’re building redundancy into our system,” he said. “We have to be ready for whatever the review brings.”
The Political Calculus
The 2026 USMCA review will take place in a highly charged political environment. With the U.S. presidential election in 2024 having reshuffled trade priorities, both parties are now keen on “Buy American” policies. The Biden administration has made no secret of its desire to reshore manufacturing, and Mexico has been pushing back against U.S. demands for stricter labor provisions. Canada, meanwhile, is worried about the impact of U.S. EV subsidies on its own auto sector.
Trade experts note that any move to reintroduce zero tariffs would require unanimous consent from all three countries, which is unlikely. Mexico, for example, has been reluctant to fully open its energy sector to U.S. investment, and Canada has its own concerns about digital services taxes. A zero-tariff deal would likely have to be paired with major concessions in other areas, something none of the parties are currently willing to offer.
Exclusive: What Stellantis Wants
In a follow-up interview with a Stellantis government affairs official who spoke on condition of anonymity, the company’s priorities for the USMCA review were outlined: (1) Maintain the current rules of origin but adjust them to include more EV-specific components; (2) Ensure that the U.S. EV tax credit does not exclude vehicles built in Mexico; (3) Avoid any new tariffs on steel and aluminum beyond the existing Section 232 duties; and (4) Create a digital trade chapter that covers
