Ford CEO Jim Farley is backing a comprehensive overhaul of the United States-Mexico-Canada Agreement (USMCA) to help American automakers compete with rivals from Japan and South Korea, he said during the company’s second-quarter earnings call on July 28, 2026. Farley positioned the trade deal’s renegotiation as critical to leveling the playing field for domestic manufacturers facing intensifying competition from foreign producers.
The USMCA, which governs nearly $1.3 trillion in annual trilateral trade, entered its formal review period on July 1, 2026, with negotiations set to continue through 2036 unless the three nations agree to extend it for another decade. Farley’s intervention during Ford’s earnings announcement underscores how central trade policy has become to the automaker’s competitive strategy, particularly as it battles rivals with entrenched supply chains in Asia.
South Korean companies currently hold 11 percent of the U.S. auto market, according to March 2026 data, while Japanese-brand automakers represent nearly one-third of all vehicles produced in the United States. The Trump administration negotiated a 15 percent flat tariff on both Japan and South Korea in 2025, but Farley argued that the USMCA framework itself needs tightening to ensure American manufacturers are not disadvantaged by competitors that rely more heavily on imported vehicles.
Farley said he wants the revised agreement to reward companies that produce more vehicles domestically and penalize those that import more cars. Current USMCA rules require vehicles to contain at least 75 percent North American content to qualify for duty-free access to the U.S. market. The U.S. is pursuing major changes to these requirements, including stricter content standards and higher regional value thresholds, according to trade negotiation documents released in June 2026.
Ford’s push for USMCA reforms comes as the automaker navigates significant competitive and operational pressures. The company posted a $1.3 billion net loss in the second quarter related to one-time special charges for electric vehicle restructuring, yet raised its full-year 2026 earnings guidance to $10 billion to $11 billion in adjusted EBIT. The automaker’s EV unit lost $722 million before taxes in the quarter, reflecting the industry-wide challenge of scaling electric vehicle production profitably while competing against lower-cost rivals from Asia.
Farley’s emphasis on USMCA reform reflects a broader industry concern: without stronger rules favoring North American production, domestic manufacturers argue they will struggle to compete against Japanese and South Korean companies that have built efficient global supply chains. The revised deal could include provisions that make it harder for foreign automakers to qualify for tariff-free entry into the North American market, thereby protecting Ford and other U.S. producers that have invested heavily in domestic manufacturing capacity.
The USMCA review process is expected to be contentious. Mexico and Canada have their own priorities, and any changes must be agreed upon by all three nations. Trade analysts note that stricter rules could raise vehicle costs for consumers and disrupt supply chains that have evolved over the agreement’s five-year history. However, Farley and other U.S. automakers argue that without reform, the competitive advantage will continue to shift toward foreign producers.
Sources
- Benzinga — Ford CEO Jim Farley’s statement that the USMCA is critical to compete with Japan and South Korea, July 29, 2026.
- Fortune — Ford Q2 2026 earnings call transcript, in which Farley said the company wants to make it easier for Ford and other U.S. makers to compete with Japan and South Korea.
- Detroit News — Ford’s Q2 2026 financial results: $1.3 billion net loss and raised 2026 profit guidance to $10-11 billion adjusted EBIT, July 28, 2026.
- ITIF (Information Technology and Innovation Foundation) — South Korean companies held 11 percent of the U.S. auto market as of March 2026.
- JAMA (Japan Automobile Manufacturers Association) — Japanese-brand automakers represent nearly one-third of all vehicles produced in the U.S.
- Electric Vehicles — Trump administration negotiated 15 percent flat tariff on Japan and South Korea in 2025; Farley’s comments on USMCA renegotiation as competitive lever, July 29, 2026.
- Reuters — USMCA automotive rules of origin require 75 percent North American content for vehicles to qualify for duty-free access, February 19, 2026.
- Mexico Business News — U.S. seeks tougher USMCA auto rules requiring 50% U.S. content and raising regional value thresholds, June 1, 2026.
- ICPA (International Compliance and Policy Analysis) — USMCA joint review began July 1, 2026, with no changes to rules of origin yet identified as legally effective as of July 19, 2026.
