According to Reuters, the U.S. Trade Representative’s (USTR) office confirmed this week that GM will not have tariffs applied to trucks built at the Silao Assembly plant. The federal government opened a case against the automaker in May after Mexican labor officials found irregularities in the union voting process at the plant, including discarded ballots.
Mexican officials later ordered the Miguel Trujillo Lopez union to hold another vote before August 20th or face losing the Silao plant contract. U.S. and Mexican labor officials oversaw the second vote on August 17th and 18th, which ended with workers rejecting the union contract proposal.
The labor row made headlines in both the U.S. and Mexico, as it was the first real test of new labor rules stipulated in the United States Mexico Canada Agreement, which replaced the former North American Free Trade Agreement (NAFTA) following a ratification vote in March of last year.
Under the USMCA, a plant can have its tariff-free status revoked if it is found to be in violation of the rules of the agreement. This would have applied a 25 percent import tariff to all trucks that were produced at the Silao Assembly plant and shipped into the United States, which would either raise the price of the trucks dramatically or cut into GM’s profit margins on each unit built.