The USMCA, concluded in 2018, strengthened automotive rules of origin (ROOs) to promote regional production—raising the regional value content (RVC) threshold and introducing requirements on North American steel/aluminum purchases and labor value content (LVC)—while also providing flexibility mechanisms such as phased implementation and the Alternative Staging Regime (ASR). However, operational uncertainty persists, as a dispute over whether the roll-up provision is permitted in calculating vehicle RVC—specifically, the treatment of non-originating materials used in core parts—has remained unresolved even after the panel ruling. Furthermore, related provisions such as the Section 232 side letters, the joint review mechanism, and the Rapid Response Labor Mechanism (RRM), combined with domestic politics, stakeholder interests, and negotiation leverage, are further amplifying this uncertainty.

North America’s automotive market is structured around the United States, with Mexico increasingly serving as a key production base. Supply-chain analysis indicates that the North American content of vehicles produced in the region is typically around 70 percent.

Korean manufacturers also show a relatively high regional content of about 50–60 percent, but the share of Korean-origin content remains substantial at roughly 40 percent. Trade patterns likewise point to a strengthening of a U.S.-import / Mexico-and- Canada-export structure, particularly for light vehicles and automotive parts. Around the USMCA’s entry into force, Korea’s export share of light vehicles and parts destined for the United States increased, and investment−particularly in U.S-based production of auto parts and secondary batteries−also rose. These changes, however, should be interpreted in light of various external factors beyond ROOs, including U.S.–China tensions, the electrification transition, and the COVID-19 pandemic.

In implementation terms, the USMCA automotive ROOs have only recently entered the early stage of full implementation due to phased application and the use of the ASR. The stringent requirements of ROOs, the unresolved dispute, and external shocks have combined to increase firms’ compliance burdens associated with claiming preferential treatment, leading some firms to forgo preferences. As a result, tariff-paying imports—particularly Mexican auto parts entering the United States—have tended to rise. Origin verification, especially for automotive parts, has also increased, and certification and verification procedures related to steel/aluminum purchases and LVC have imposed substantial burdens on both enforcement authorities and firms. Stakeholder positions diverge sharply across issues, with competing views on maintaining the current framework and implementing administrative and technical improvements, versus strengthening ROOs.

The 2026 joint review is expected to go beyond a simple assessment of operation, raising the possibility of revisions to, and an extension of, the agreement, further increasing uncertainty in the North American market. It is widely anticipated that this joint review is unlikely to reach an agreement and will instead transition to the annual review phase. Considering the already stringent requirements of automotive ROOs, firms’ compliance burden, the EV chasm, and the continued use of Section 232 measures, a major upward revision of the ROOs thresholds appears unlikely. The joint review is more likely to focus on resolving outstanding disputes, easing certification and verification burdens, improving the competitive environment among manufacturers under Section 232, and strengthening trilateral cooperation on economic security and critical minerals. In response, Korean firms should pursue a strategy centered on expanding U.S. production while leveraging Canada (as a base for batteries and critical minerals) and Mexico (as a supplementary production base), and should enhance their origin management systems to prepare for intensified post origin verification. The government should strengthen support for SMEs and mid-sized firms and proactively advance research on “Korea-tailored” ROOs that reflect the transition toward electrification and software-defined vehicles (SDVs).