The National Auto Parts Industry (INA) highlighted five impacts for Mexico if US President Donald Trump imposes general tariffs.
Founded in 1961, INA represents more than 700 auto parts manufacturing plants with operations in Mexico.
Impacts for Mexico
Trump has signed executive orders allowing the imposition of high tariffs if Mexico, Canada and China do not comply with certain conditions related to migration, drug trafficking (especially fentanyl) and national security.
In this regard, after reaching partial agreements and for further negotiations, Trump granted Mexico and Canada a one-month deadline on February 3, 2025. If the negotiations fail, the United States would apply a 25% tariff to its two neighbors (10% in the case of Canadian energy products). However, it applied an additional 10% tariff to China, effective February 4.
These are the impacts for Mexico if Donald Trump imposes tariffs, according to INA:
- Increased costs in the supply chain.
- Slowdown in nearshoring and foreign investment.
- Risks to employment in Mexico.
- Drop in exports and the automotive sector’s share of manufacturing GDP.
- Distortion of the Treaty between Mexico, the United States and Canada (USMCA) and loss of competitiveness of the North American region vis-à-vis Europe and Asia.
Unilateral Tariffs
Additionally, on February 9, 2025, Trump announced a new trade measure. The U.S. will apply a 25% tariff on steel and aluminum imports regardless of their country of origin.
Trump added that he will announce reciprocal tariffs on unspecified countries, perhaps this Monday or Tuesday.
The U.S. Department of Commerce, through the Bureau of Industry and Security (BIS), submitted on September 25, 2024 a regulatory proposal on connected vehicles. This initiative seeks to restrict transactions related to Vehicle Connectivity Systems (VCS) and Automated Driving Systems (ADS).
The measure seeks to limit the importation of auto parts and components from China and Russia, which could affect the assembly process and generate a significant impact on Mexico’s automotive industry.
According to the Mexican government, the automotive sector will face disruptions in supply chains due to the dependence on auto parts and components from China. Given that assembly is one of the main activities in Mexico, these disruptions could affect the sector’s growth.