Mexico has established itself as a major producer and supplier to the automotive industry, which is currently experiencing uncertainty surrounding the revision of the United States-Mexico-Canada Agreement (USMCA) . Manuel Montoya, director of the Nuevo León Automotive Cluster (CLAUT) , stressed that northeastern Mexico is emerging as a key region for strengthening the automotive supply chain.

In this regard, he highlighted that this area concentrates the majority of the country’s Tier 2 supply.

“The northeast region is primarily home to Mexican-owned companies that work for major automakers and top-tier suppliers. It’s a landscape that needs to be strengthened because it’s at the heart of national integration,” he stated.

Although production remains stable, new investments are on hold while the future of the negotiations is defined , warned Manuel Montoya, as they are waiting to see what happens with the rules of origin in this treaty.

“The sector continues to produce and export; we’re even at the same pace as last year and could close with four million vehicles manufactured in Mexico. However, new projects and models are on hold, awaiting clarity on the rules,” Montoya explained.

The demand to integrate more regional content has put pressure on international automakers, which in turn opens up opportunities for local suppliers.

Previously, some automakers preferred to pay a tariff for failing to comply with the rules of origin; today, with the threat of tariffs of up to 27.5% , that strategy is no longer viable.

“It’s no longer viable to rely on components from Japan or Germany. Corporations are pushing their plants in Mexico to find suppliers, and we see frequent requests in our region for processes such as plastic injection molding and machining. This represents a great opportunity for companies in the northeast and Mexico,” he explained.

Montoya also warned about other factors that directly impact the sector, such as the exchange rate, which affects the competitiveness of exporters, and electromobility, which requires investment in infrastructure and battery production in North America to reduce dependence on China.

Review of the USMCA: tensions and pending definitions

In this regard, Montoya anticipated that the treaty revision will bring pressure on two fronts: relaxing rules of origin , as some U.S. automakers are seeking; and tightening requirements , a position of regional governments seeking to maintain jobs and local content.

Added to this is the uncertainty surrounding China’s role in the North American market .

“Chinese companies have held back on their decision to set up plants in Mexico because it’s unclear whether they will be able to export their vehicles to the United States. This will be a key aspect of the negotiations,” he warned.

Regarding the Mexican government’s recent move to impose tariffs on Chinese vehicles, Montoya considered it a necessary action to level the competitive playing field.

“It’s logical that we ask for the rules to be changed, because these vehicles arrive with subsidies and under dumping conditions. We can’t give away our industry. Chinese cars have good technology and prices, but they must compete on a level playing field, also generating jobs and investment in Mexico,” he said.

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The global automotive industry has become one of the most complex chessboards in today’s geopolitical chess game, amid trade tensions, environmental regulations, and reindustrialization ambitions.

From the trade war driven by US President Donald Trump to China’s technological and manufacturing offensive, to Europe’s efforts to lead the energy transition, the automotive sector has moved beyond being just a matter of factories and auto parts, becoming a key focus of global economic diplomacy.

In this context, the Mexican Foreign Service Association (ASEM) convened three experienced voices who agreed that Mexico faces a new strategic opportunity , but only if it acts with intelligence and regional vision.

“What we’re seeing is the pendulum swinging back. For years, production chains migrated to Asia, turning China into the world’s factory. But now, the United States wants to regain control, strengthen its industrial base, and restore lost jobs,” said Guillermo Bernal del Valle, director of Public Affairs for the American Chamber of Commerce in Mexico .

That decision has had consequences. Donald Trump imposed tariffs of up to 145% on Chinese products and extended the tariffs to countries like Vietnam, Malaysia, and India, all of which are strong competitors of Mexico in manufacturing.

In contrast, Mexico has been exempt, which Guillermo Bernal interprets as tacit recognition of the validity of the Treaty between Mexico, the United States and Canada (T-MEC) .

For his part, Guillermo Rosales Zárate, executive president of the Mexican Association of Automobile Dealers (AMDA) , was critical of the economic logic behind Trump’s policy.

“I struggle to find any rationale in Trump’s decisions. Returning to a 20th-century manufacturing model is not viable; the United States lacks the demographic or economic capacity to sustain it. Its true value lies in services, not in the production of goods,” Rosales Zárate stated.

For the leading auto dealer, the key is to strengthen regional cooperation , as the North American auto industry operates as an integrated chain in which a vehicle can cross the border up to eight times before being completed.

“We can’t talk about a Mexican or American car. We’re talking about a North American vehicle,” he asserted.

But if the integration model works, why hasn’t Mexico capitalized more fully on its position? Arnulfo Gómez, Mexico’s former trade representative to Canada, noted that “we lacked strategy.”

He explained that with the entry into force of the North American Free Trade Agreement (NAFTA) in 1994, Mexico should have strengthened its industrial base ; however, between 2000 and 2015, more than 2,500 foreign companies, many of them in the automotive sector, left the country for Asia.

“While others were defining clear industrial policies, we were signing scattered treaties without direction or objectives,” he said.

The problem worsened when reviewing the regional integration of exported vehicles.

In 1994, 35% of the value of a car produced in Mexico was domestically produced, and by 2019 that proportion had fallen to just 26%.

According to Gomez, this is due to a lack of investment in training, technology and supplier development .

USMCA, a more demanding integration

Despite past mistakes, the new trade agreement between Mexico, the United States, and Canada opened a new window of opportunity.

The USMCA now requires that 75% of a vehicle’s value come from the region to be tariff-free.

It also establishes stricter sourcing criteria for key components such as the engine, transmission, steel, and aluminum, as well as a minimum wage requirement of $16 per hour for at least 40% of production.

“These new rules have made integration more complex, but they have also generated greater value in the region,” Rosales explained.

He also highlighted that since the renegotiation of the trilateral treaty, Mexico has consistently increased the volume of locally produced auto parts and components.

Regional logic seems to prevail despite protectionist rhetoric, and today 65% ​​of vehicles assembled in North America are produced in the United States, 28% in Mexico , and 7% in Canada.

Furthermore, nearly 40% of the value of a vehicle produced in Mexico corresponds to U.S. inputs and services, and vice versa.

“If the United States wants to compete with China or Europe, it needs Mexico and Canada. The challenge is for us to understand this and act accordingly,” Bernal said.

In this context, experts agreed that the automotive industry is no better off than it was before the Trump administration . However, compared to direct competitors like Germany and Japan, Mexico is in a better position, which could be taken advantage of.

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The North American automotive sector must prepare for increased scrutiny related to compliance with the origin of its parts in order to continue benefiting from the United States-Mexico-Canada Agreement (USMCA), according to experts.

“Verifications will come very frequently, much more than normal,” said Fausto López, regional vice president of the Mexican Business Council for Foreign Trade, Investment and Technology (Comce) South , during the conference titled T-MEC and Tariff Impact (Automotive Industry) North America , organized by the Mexican Institute of Foreign Trade Executives (IMECE) .

Fausto López’s statement comes as the U.S. administration of Donald Trump has been pushing for a 25% tariff on imported automobiles starting April 3 , a measure intended to stimulate the growth of the industry in the country.

The negotiator of the so-called “next room” (business team) during the meetings that resulted in the signing of the USMCA also explained that, since the entry into force of the North American Free Trade Agreement (NAFTA) in 1994 and the elimination of tariffs, Mexico’s automotive exports have experienced a 200% growth , reaffirming the sector’s integration into the North American region.

In the mid-1990s, a “vochito” (Volkswagen sedan) produced in the country barely had 30% of regional origin; today, the USMCA requires a Regional Value Content (RVC) of 75% , a RVC for essential parts also of 75%, that aluminum and steel purchases be 70%, and a Labor Value Content of 40 percent.

Currently, of the total new car sales generated in the United States in 2024, 16.3% originate in Mexico , making it the main external supplier to the United States, followed by South Korea (8.8%), Japan (8.4%), Canada (6.2%), and Germany (2.7%). According to Standard & Poor’s, 53.9% of sales come from units produced in the United States itself.

“With NAFTA, we lived in a comfort zone, and there were no revisions until Mr. Trump came along in 2016 and started saying that NAFTA was the worst agreement they’d ever signed,” López said.

Mexican President Claudia Sheinbaum has said that the country will not issue a comprehensive response to the United States’ imposition of tariffs on automotive imports until April 3 .

Trump’s latest tariff announcement allows USMCA-compliant vehicle manufacturers to certify U.S. content, and the tariffs apply only to non-U.S. vehicles. Tariffs on USMCA-compliant parts will not apply until a process is established to identify U.S.-origin content in those parts.

Fitch expects U.S. automakers to raise prices across the board, although the tariffs will affect each make and model differently. Some automakers may struggle to raise prices enough to cover the 25% tariffs and will have to make painful adjustments to production and sales plans.

“The impact of tariffs on auto parts is less transparent due to the complexity of the supply chain. Beyond higher costs, there is some risk that the transition could result in parts delays or supply chain disruptions affecting U.S. auto manufacturing, similar to 2021-2022. However, this is temporarily mitigated by the delay in tariffs on USMCA-compliant auto parts,” according to Fitch.

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Eighty percent of the vehicles Mexico manufactures for shipment abroad are exported to the United States , so the 25% tariffs recently imposed on imported cars by Donald Trump, president of Mexico, will affect several automotive brands.

According to figures from the Administrative Registry of the Light Vehicle Automotive Industry (RAIAVL) of the National Institute of Statistics and Geography (INEGI) , in 2024 Mexico exported three million 479 thousand 086 vehicles , with two million 771 thousand 287 units sent to the United States alone .

In this context, General Motors (GM) exported 830,820 units , of which 711,582 were sent to the United States, representing 86 percent . Meanwhile, of Mexico’s total vehicle exports to the United States, GM accounted for 26 percent .

The models that GM exported the most to its northern neighbor were the Equinox SUV , with 219,071 units ; GMC Sierra , with 140,106 vehicles ; and the Silverado 2500 double cab , with 137,341 vehicles , during that period.

Ford would be another of the firms affected by Trump’s tariffs, since it shipped 379,849 cars abroad from Mexico , of which 358,366 units were for the United States, which represented 94% of its exports in 2024. Of the total shipments abroad from Mexico to its northern neighbor, 13% were from Ford.

Maverick, Bronco Sport and Mustang Mach-E  were the most exported models to the United States, with 165,337, 148,215 and 44,814 units , respectively.

According to data from INEGI (National Institute of Statistics and Geography), Nissan shipped 456,866 vehicles abroad , of which 326,682 were shipped to the United States from Mexico, representing 72 percent . The Japanese firm accounted for 12 percent of Mexico’s exports to the United States.

The models Nissan exported the most to the United States during this period were Sentra , with 179,767 units; Kicks , with 85,783 cars ; and Versa , with 49,398 vehicles.

From Mexico, Toyota exported 245,121 units to various countries , of which 227,849 were sent to the United States , representing 93% of its exports. Of the country’s total overseas shipments to its northern neighbor, 8% were from Toyota in 2024.

During that period, Chrysler exported 353,307 units from Mexico , while 314,272 vehicles went to the United States, representing 89 percent . This automaker accounted for 11 percent of Mexico’s exports to the United States.

KIA exported 167,115 units to the United States , representing 81% of its total exports. Six percent of Mexico’s car shipments to the United States were from the Korean company during this period.

In 2024, Honda exported 232,433 units from Mexico to various countries, of which 211,465 vehicles , or 91 percent , were shipped to the United States . Of the total car shipments from Mexico to the United States, the Japanese automaker accounted for 8 percent .

According to data from INEGI (National Institute of Statistics and Geography), Volkswagen shipped 231,138 vehicles to the United States , representing 71% of its exports, which totaled 326,217 units last year. The German firm accounted for 8% of Mexico’s auto exports to the northern neighbor.

Meanwhile, Mazda exported 141,933 units , of which 112,629 were shipped to the United States from Mexico , representing 79 percent . Its share of exports to the United States was 4 percent last year.

German companies Audi , BMW and Mercedes-Benz exported 55,846 , 38,426 and 15,918 vehicles to the United States , respectively, in 2024.

According to these figures, most automotive firms would be affected by the 25% tariff levied on vehicles imported by the United States, a measure that will take effect on April 2 and currently excludes auto parts that comply with the United States-Mexico-Canada Agreement (USMCA) .

Donald Trump announced at a press conference on March 26 that the tariff will apply to finished cars and trucks exported to the northern neighbor, including American brands whose cars are assembled abroad.

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U.S. President Donald Trump announced Wednesday 25% tariffs on vehicles entering the United States from several countries around the world, including Mexico and Canada, its main trading partners in North America, with the aim of boosting the growth of the automotive sector in the country’s northern neighbor.

At a press conference, the U.S. president said the tax will apply to finished cars and trucks exported to the U.S., including American brands whose cars are assembled abroad.

“What we’re going to do is impose a 25% tariff on all cars that aren’t made in the United States; if they’re made in the United States, there’s no tariff,” he asserted.

From the Oval Office in Washington, DC, he pointed out that if a vehicle is built in the United States, tariffs will not be paid, and he specified that the measure will go into effect on April 2 .

He also assured that the aforementioned tax will not apply to parts produced in the United States.

“This is the true Liberation Day in America,” he emphasized, noting that he will sign an executive order on the matter that will elevate the U.S. auto industry.

“We’re going to charge countries for doing business in our country and for taking our jobs, our wealth, and many other things they’ve been taking for years,” Trump said at the conference.

The US president has long said that tariffs on auto imports would be a defining policy of his administration, betting that the costs generated by the taxes would force more production to move to the United States.

Although Trump has stated that he does not want vehicles manufactured in Mexico and Canada, and has announced that he has major plans to have automakers move their manufacturing to the United States, the United States remains the main buyer of cars manufactured in Mexico.

“I don’t want cars from Canada. I don’t want cars from Mexico. I want car companies to build here,” the US president asserted.

According to the  National Institute of Statistics and Geography (INEGI) , the export of light vehicles manufactured in Mexico during the first two months of 2025 was  478,366 units , and the United States was its main destination, with  84.2%  reaching  402,986 units ; Canada followed   with  41,804 cars , which represented  8.7%  of car shipments abroad.

According to the Ministry of Economy , in 2024 Mexico captured six thousand 925 million dollars (mdd ) for the manufacturing of cars and trucks, which meant an increase of 36% compared to 2023, when the investment was five thousand 091 million dollars .

This announcement of tariffs on imports of vehicles manufactured outside the United States comes one week before “Liberation Day” on April 2, when the U.S. government is expected to announce reciprocal tariffs, which Trump has announced will be very “lenient.”

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