Amid growing trade tensions and on the eve of the review of the United States-Mexico-Canada Agreement ( USMCA) , the Mexican automotive sector faces one of the most complex and, at the same time, decisive moments in its recent history.
During the conference “State of the Mexican Automotive Sector: USMCA, Tariffs and Statistics” , Alberto Bustamante , president of the National Agency of Suppliers of the Automotive Sector (Anapsa) , outlined a scenario in which US tariff pressure, the tightening of trade rules and, at the same time, a window of opportunity to consolidate Mexico as a global power converge.
The starting point was that Mexico is no longer a secondary player . With exports to more than 100 countries and a production of around 4.2 million vehicles per year, the country has consolidated its position as the second largest manufacturer in North America, surpassing Canada, whose market share has been steadily declining.
For Bustamante, this change is not a coincidence, but the direct result of trade integration since 1994.
“The only winner has been Mexico,” he stated.
However, the sector’s importance is not limited to production volume. The automotive industry accounts for approximately 22% of the country’s manufacturing employment and has built a supply network that provides over 900,000 direct jobs in auto parts.
This ecosystem not only supports the assembly plants, but also multiplies the economic impact, so that for every job in an assembly plant, multiple positions are generated in the supply chain.
The true weight of the sector is reflected in its trade balance. With a surplus of nearly $108 billion , the automotive industry surpasses, even combined, industries such as remittances, tourism, and oil.
This strength is largely explained by Mexico’s strategic role as a supplier of auto parts to the United States. Today, 43% of U.S. imports in this sector come from Mexico , an advantage that places the country well ahead of other partners like Canada.
This interdependence has generated a stark reality: no internal combustion engine vehicle in the United States can be manufactured without Mexican components.
Each unit produced in that country incorporates, on average, more than $10,000 worth of auto parts from Mexico . But this very importance is what has placed the sector at the center of the trade dispute.
Heading towards the USMCA review
Ahead of the trade agreement review, the United States is seeking to tighten the rules of the game. The proposal includes raising the regional content requirement for vehicles from 75% to 85% , requiring that at least half of the components come directly from U.S. territory, and strengthening labor provisions.
This is in addition to a broader strategy aimed at reducing dependence on Asia, particularly China.
Meanwhile, the tariff environment has become more aggressive. Although the USMCA allows for exports with preferential rates, various measures implemented by Washington have resulted in tariffs of up to 25% for certain vehicles and components, especially those with high steel, aluminum, or copper content.
“The automotive sector is in the eye of the storm,” Bustamante warned.
Mexico, for its part, has begun to take measures following the same geopolitical logic. The imposition of tariffs of up to 50% on products from countries without trade agreements , particularly China, seeks to strengthen regional integration.
However, the industry has expressed concerns when these measures affect essential raw materials for manufacturing, such as plastic, which could increase the cost of local production.
In this context, the upcoming review of the USMCA, which will formally begin in July, is shaping up to be a turning point. Anapsa is calling for ensuring conditions of certainty and protecting the sector from unilateral measures.
Among the proposals, the signing of parallel agreements to protect the automotive industry from new tariffs stands out, as well as the strengthening of the rule of law and security, factors that directly affect competitiveness.
Despite the adverse environment, the diagnosis is not pessimistic; on the contrary, Bustamante anticipated that Mexico is heading towards a new stage of expansion.
In the coming years, the country could position itself as the world’s fourth largest producer of light vehicles and the third largest in auto parts, driven by greater regional integration and new investments, many of which, he assured, are already taking place, although with less public visibility.
“Turbulent times are coming,” he acknowledged.
But he also made it clear that the sector has built a solid enough foundation not only to withstand the strain, but to grow.
The Mexican automotive industry, which took more than two decades to consolidate, now faces its next big test: adapting to a more restrictive environment without losing its place as one of the country’s economic pillars and an indispensable partner for North America.
Comment and follow us on LinkedIn: @Jennifer Galindo / @GrupoT21
