Minute by minute, the automotive industry follows with concern and uncertainty the announcements regarding tariffs that the U.S. president enforces, postpones, or suspends.
After over a month of threats, on 4 March, Donald Trump implemented a 25% tariff on imports from Canada and Mexico, only to suspend it “for a month” the next day for the automotive sector after negotiations with executives from Stellantis, Ford, and General Motors, according to the White House.
Then, 24 hours later, in a conversation with his Mexican counterpart, Claudia Sheinbaum, regarding border conflicts between the two countries, he agreed to postpone the tariff for all products entering the United States, at least until 2 April.
How Will This Decision Impact Mexico’s Vehicle Trade?
The United States-Mexico-Canada Agreement (USMCA) requires that 75% of a vehicle’s components be manufactured in North America to qualify for zero tariffs when traded between the three nations.
The agreement is due for review before July next year, but currently, it ensures full integration of the production chain among the three countries. For this reason, the U.S. aims to implement the new tariffs under the International Emergency Economic Powers Act.
According to sources consulted by Mobility Portal Latinoamérica, these tariffs could negatively impact Mexico’s automotive industry due to its high export volume. The increased production costs resulting from the tariffs would reduce the competitiveness of local companies, making their products more expensive in the U.S. market.
Additionally, the move could slow down foreign investment in Mexico, affecting the growth of nearshoring and the establishment of new manufacturing plants in the country.
The Automotive Industry Watches Trump’s Tariff Plans Closely
Despite concerns, industry leaders remain cautious and somewhat sceptical about whether Trump will fully enforce these measures, suspecting he may be using them to pressure neighbouring countries on migration and security policies.
Daniel Hernández, Director of the Querétaro Automotive Cluster, states:
“We have to wait and see if this actually materialises, but there are many regulatory agreements in place. Let’s not forget that the USMCA holds the weight of law in all three countries.”
“Ultimately, North America’s automotive industry is powerful and economically attractive, particularly because of the auto parts produced in Mexico, which cannot be ignored. In the end, this would only lead to increased costs for consumers who now have more options, including vehicles from other regions.”
“While we keep a close eye on developments, I believe the industry’s key concerns go beyond this. We trust in an agreement that has harmonised supply chains and benefited all three nations.”
Meanwhile, Manuel Montoya, Director of the Nuevo León Automotive Cluster, warns:
“These types of policies could severely impact both countries. The automotive industry is so integrated that imposing tariffs on components entering the U.S. will make cars produced there more expensive.”
“In 2024, we exported around 3.5 million vehicles from here, but nearly $100 billion in auto parts. The auto parts industry is even bigger for us, and these components go to vehicle manufacturers based in the U.S.”
Furthermore, Montoya remains confident that
“it’s not cost-effective for them to source auto parts from Brazil or Japan. They will continue to rely on Mexico, and vehicles will become more expensive due to these tariffs.”
A “Closed” Policy That Affects Trade Agreements
Gustavo Jiménez, CEO of Emobilitas, notes:
“Trump’s return to the U.S. presidency was expected to impact numerous trade agreements with Mexico, particularly those established under the Biden administration, which strongly promoted electromobility.”
“The current president has a different approach to foreign policy—he wants to bring everything back to America and prioritise ‘America First.’ However, this will negatively affect countries like Mexico by blocking substantial investment.”
“Therefore, these tariffs could significantly reduce vehicle sales to the U.S., our largest market. About 80% of the cars produced here are exported to the U.S. and Canada. The industry could suffer greatly.”
On the import side, Juan Cerdeira of SEV (Solarever’s electric vehicle division) comments:
“President Donald Trump has the right to defend his industry, and it’s clear that the U.S. automotive sector is at least a decade behind what we are experiencing with Chinese products.”
“If we can’t export to the U.S., electric vehicles will at least dominate in Mexico and Central America. Even with tariffs, their *competitive pricing remains attractive.”
He concludes:
“Trump wants nothing related to assembly operations that could ‘accidentally’ enter the U.S., and I’m certain he will exert significant pressure to prevent that from happening. However, assembly operations will continue and even expand to serve the Mexican, Central, and South American markets. Once Trump leaves office, the story will change.”
