What do Trump’s coming tariffs mean for Mexico’s auto industry?

U.S. President Donald Trump announced Wednesday that helium would enforce a 25% tariff “on each cars that are not made successful the United States,” but U.S. contented successful vehicles assembled successful Mexico volition beryllium exempt from the duty, lowering the effectual tariff connected vehicles made successful Mexico.

The tariff, which volition besides use to definite automobile parts, is scheduled to instrumentality effect adjacent Thursday April 3, but it appears that Mexican parts compliant nether the United States-Mexico-Canada commercialized statement (USMCA) volition not instantly beryllium taxed.

More than 80% of the vehicles exported from Mexico spell to the United States, including those made by respective U.S. automakers, specified arsenic General Motors and Ford. (Shutterstock)

Mexico exported immoderate 2.9 cardinal vehicles to the United States past year, and full automotive exports (Mexican-made vehicles and parts) generated gross of much than US $181 billion.

More than 80% of the vehicles exported from Mexico spell to the United States, meaning that the soon-to-be-imposed tariff volition person a large interaction connected the Mexican car industry, which includes U.S. automakers specified arsenic General Motors and Ford arsenic good arsenic different companies that vessel vehicles crossed the border.

In a information expanse published connected Wednesday, the White House noted that President Trump had “signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962 to enforce a 25% tariff connected imports of automobiles and definite automobile parts, addressing a captious menace to U.S. nationalist security.”

The White House said that “the 25% tariff volition beryllium applied to imported rider vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and airy trucks, arsenic good arsenic cardinal automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to grow tariffs connected further parts if necessary.”

Trump described the tariff arsenic “very modest” and noted that “if parts are made successful America and a car isn’t, those parts are not going to beryllium taxed oregon tariffed.”

“And we’ll person precise beardown policing arsenic acold arsenic that’s concerned,” Trump said.

“For the astir part, I deliberation it’s going to pb cars to beryllium made successful 1 location. Right now, a car would beryllium made here, sent to Canada, sent to Mexico, sent each implicit the place. It’s ridiculous,” helium said.

Asked whether determination were immoderate conditions nether which helium would assistance the car tariffs, Trump said they were “permanent.”

President Trump announces 25% tariffs connected each cars shipped into the United States that volition spell into effect April 2. pic.twitter.com/EUmRJ0Hkaa

— CSPAN (@cspan) March 26, 2025

The tariff arsenic it volition use to vehicles made successful Mexico 

The White House said that “importers of automobiles nether the United States-Mexico-Canada Agreement volition beryllium fixed the accidental to certify their U.S. content, and systems volition beryllium implemented specified that the 25% tariff volition lone use to the worth of their non-U.S. content.”

It besides said that “USMCA-compliant automobile parts volition stay tariff-free until the Secretary of Commerce, successful consultation with U.S. Customs and Border Protection (CBP), establishes a process to use tariffs to their non-U.S. content.”

It was unclear however soon that process would beryllium established.

Guillermo Rosales, president of the Mexican Association of Automotive Distributors (AMDA), said that a conveyance made successful Mexico for export to the United States has, connected average, 40% U.S. content. The effectual tariff connected a conveyance assembled successful Mexico with 40% U.S. content  would beryllium 15%.

Given the effectual tariff complaint connected Mexican-made cars volition beryllium little than the afloat 25%, Mexico volition person a “competitive advantage” implicit different countries and trading blocs, the Milenio paper reported.

It volition beryllium up to U.S. Secretary of Commerce Howard Lutnick, right, to found a tariff appraisal process for non-U.S. contented that would usually beryllium duty-free nether the United States-Mexico-Canada Agreement (USMCA), but it is not yet wide erstwhile that volition happen. (File photo/U.S. Department of Commerce)

Ebrard: ‘We person to question preferential attraction for Mexico’ 

After highlighting that Mexico exports astir 3 cardinal vehicles annually to the United States and supplies 40% of each parts utilized successful car plants successful the U.S., Economy Minister Marcelo Ebrard told President Claudia Sheinbaum’s Thursday greeting property league that the Mexican authorities volition question to negociate a amended result for Mexico.

“If they’re going to alteration the system, if we’re going to spell to a strategy of specified precocious tariffs, what we person to bash is question preferential attraction for Mexico truthful that we person the conditions to support jobs and the economical enactment of Mexico,” helium said.

For her part, Sheinbaum said that the authorities volition supply “a broad effect connected what Mexico volition bash successful the look of this situation” connected April 3.

The United States has already imposed 25% tariffs connected Mexican alloy and aluminium arsenic good arsenic goods from Mexico not covered by the USMCA. The U.S. besides intends to enforce reciprocal tariffs connected goods from each its trading partners connected April 2.

“We don’t privation to springiness a effect to each issue, but alternatively a broad response,” Sheinbaum said.

She pledged to “protect Mexico, the jobs that are created present and Mexican companies.”

The extremity of the USMCA? 

Rosales, the AMDA chief, highlighted that Trump’s caller car tariff violates the presumption of the USMCA, which superseded NAFTA successful 2020.

“Trump is changing from a regularisation of determination integration to a regularisation of nationalist origin,” said Ildefonso Guajardo, Mexico’s erstwhile system curate who headed Mexico’s USMCA dialog squad during Enrique Peña Nieto’s presidency. (Ildefonso Guajardo/X)

As things stand, vehicles made successful Mexico tin participate the United States tariff-free nether the USMCA provided that they person North American contented of astatine slightest 75%.

“Trump is changing from a regularisation of determination integration to a regularisation of nationalist origin,” said Ildefonso Guajardo, a national lawman who served arsenic system curate betwixt 2012 and 2018 and frankincense headed up Mexico’s USMCA dialog squad during the presidency of Enrique Peña Nieto.

“… It’s a flagrant usurpation [of the USMCA],” Guajardo said.

For his part, the Latin America manager of automotive consultancy Urban Science, Eric Ramírez, said that the caller tariff appeared to correspond “the extremity of the USMCA and 3 decades of integration” betwixt the car sectors of Mexico, the United States and and Canada.

Ramírez besides said that it volition beryllium “very complex” to find what is U.S. contented and what is North American contented arsenic “there are systems that are completed betwixt the 3 countries and which transverse the borderline respective times” during production.

The White House said that “legislation, pre-existing commercialized agreements similar the USMCA, revisions to the U.S.-Korea Free Trade Agreement, and consequent negotiations person not sufficiently mitigated the menace to nationalist information posed by imports of automobiles and definite automobile parts.”

“These caller tariffs purpose to guarantee the U.S. tin prolong its home concern basal and conscionable nationalist information needs,” it added.

The tariff ‘doesn’t marque immoderate economical sense’

Trump said Wednesday that his signing of an enforcement bid to instrumentality the caller tariff marked “the opening of Liberation Day successful America.”

Tariffs volition adhd astir US $6,000 to the retail outgo of autos sold successful the U.S. but assembled successful Mexico, similar the Toyota Tacoma, which are manufactured successful Apaseo el Grande, Guanajuato. (Toyota)

“We’re going to instrumentality backmost conscionable immoderate of the wealth that has been taken from america by radical sitting down this table … and we’re going to complaint countries for doing concern successful our state and taking our jobs, taking our wealth, taking a batch of things that they’ve been taking implicit the years,” helium said.

Mexico had a record-high surplus of US $137.8 cardinal connected automotive commercialized with the United States past year, according to the U.S. Department of Commerce.

Mexico is the apical exporter of vehicles to the United States, up of South Korea, Japan, Canada and Germany. According to the White House, “in 2024, Americans bought astir 16 cardinal cars, SUVs, and airy trucks, and 50% of these vehicles were imports.”

Citing information from Capital Economics, The New York Times reported that Mexico’s automotive manufacturing assemblage accounts for astir 5% of the country’s economical enactment and employs astir 1 cardinal people. Auto manufacturing successful Mexico is mostly concentrated successful the northbound of the state and the Bajío, meaning that states successful those regions look the biggest interaction from the caller tariff.

Citing Cox Automotive, the Times said that “tariffs would adhd $6,000 connected mean to the prices of cars made successful Mexico oregon Canada, a class that includes vehicles similar the Toyota Tacoma pickup, gasoline and electrical versions of the Chevrolet Equinox, and respective models of Ram pickups.”

Óscar Silva, who leads consulting steadfast Roland Berger’s concern and automotive practices successful Mexico, said that the caller tariff “doesn’t marque immoderate economical sense” and volition extremity up harming the economies of some Mexico and the United States.

Trump has suggested that the implicit US $100 cardinal that his tariffs volition bring the U.S. successful revenues volition beryllium shouldered by overseas countries, but the world is that companies and idiosyncratic concern owners volition beryllium the ones paying. (Continental)

An economical windfall for the United States?

Trump said that the work volition make hundreds of billions of dollars of gross for the United States successful a abbreviated play of time, though the adjutant who handed him the enforcement bid said much specifically, “We expect that these tariffs volition effect successful implicit $100 cardinal of caller yearly revenue.”

“Anywhere from $600 cardinal to $1 trillion volition beryllium taken successful implicit the comparatively short-term period, meaning a twelvemonth from now,” Trump said. “But starting close distant — starting close distant — I deliberation we’ll spell from $600 [billion] to a trillion wrong 2 years.”

So-called “importers of record” volition wage the tariff to the United States government.

The New York Times reported that “importers of grounds [in the United States] tin beryllium of immoderate nationality … but Richard Mojica, a customs lawyer astatine Miller & Chevalier, said that importers of grounds are typically owners oregon purchasers of goods, and are ‘usually U.S. companies.'”

“Many U.S. companies person expressed vexation with Mr. Trump’s predominant assertions that overseas countries wage for tariffs, saying they are paying those taxes themselves,” the Times added.

Trump besides said Wednesday that the caller tariff volition promote automakers and their suppliers to unfastened caller plants successful the United States.

“A batch of overseas car companies, a batch of companies are going to beryllium successful large signifier due to the fact that they’ve already built their plant. But their plants are underutilized, truthful they’ll beryllium capable to grow them inexpensively and quickly. But others volition travel into our state and physique and they’re already looking for sites,” helium said.

With reports from Milenio, El País, El Economista, Reforma, El Financiero and The New York Times