Mexico races to stall or evade Trump’s 25% auto tariffs
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- Economists in Mexico fear the large import taxes could plunge the already shaky Mexican economy into a recession.
- Mexican President Claudia Sheinbaum said her government would wait until next week to announce how it will respond in the escalating trade war.
- Canadian Prime Minister Mark Carney vowed his country would take “retaliatory trade actions of our own.”
MEXICO CITY — Facing potential economic fallout from planned U.S. tariffs, Mexican authorities are pushing the White House to exclude Mexican vehicles and car parts from President Trump’s planned 25% levies on automobile imports.
“We don’t want to lose a single job in our country,” a somber President Claudia Sheinbaum told reporters at her morning news briefing Thursday. “There is room for talks, for collaboration, for negotiation.”
Mexico is seeking a continuation of the current North American free-trade regimen on auto imports, said Marcelo Ebrard, Mexico’s minister of the economy.
“If we are moving to a system of such high tariffs, what we have to look for is preferential treatment for Mexico,” said Ebrard, who appeared via video link from Washington, where he has been meeting with senior Trump administration officials. Ebrard said he had already met six times with U.S. Commerce Secretary Howard Lutnick, underscoring the crucial importance of the tariff issue for Mexico.
President Trump said Wednesday he was placing 25% tariffs on auto imports, a move that the White House claims would foster domestic manufacturing but could also put a financial squeeze on automakers.
Mexican authorities have also been seeking out U.S. car manufacturers — heavily reliant on Mexican components and assembly — who have also balked at the import taxes and called Trump’s predictions of quickly renewed auto production in the United States unrealistic.
“It’s not so easy to transfer a plant [from Mexico] to the United States,” Sheinbaum noted.
Mexico’s multibillion-dollar vehicle and auto parts manufacturing sectors — overwhelmingly geared toward exports to the United States — represent a crucial axis of the Mexican economy. The industry directly employs more than 1 million people, not including tens of thousands of collateral jobs in transport, logistics and other fields.
The Mexican president, who has maintained what she calls a “cool-headed” approach in contentious, back-and-forth tariff discussions with the Trump administration, said Mexico would not formulate a full response — which could include retaliatory tariffs against U.S. imports — until at least Tuesday. The new tariffs will go into effect at 12:01 a.m. Eastern daylight time on April 3.
Sheinbaum’s muted reaction contrasted with global condemnations of the new tariff mandates after Trump’s signing of an executive order Wednesday imposing a 25% tariff on imports of automobiles and auto parts.
“We will fight the U.S. tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” Canadian Prime Minister Mark Carney told reporters Thursday. Brazilian President Luiz Inácio Lula da Silva charged that “free trade is being harmed … [and] multilaterism weakened,” while Japanese Prime Minister Shigeru Ishiba said he wants his nation to be exempt from the tariffs.
Bars, wine shops and importers are anxious about Trump’s proposed tariffs, which they say will imperil an industry already facing serious challenges.
But no country is more vulnerable on the tariff front than Mexico, which has largely pinned its economic strategy on cross-border business since the 1994 implementation of the North American Free Trade Agreement — the landmark pact known as NAFTA that opened up mostly duty-free commerce between Mexico, the United States and Canada.
In a generation, Mexico’s auto sector has been transformed from a largely domestic venture into a global force. Mexico is now the No. 1 exporter of automobiles and auto parts to the United States.
General Motors and Ford are among the U.S. manufacturers in Mexico, along with giants such as Volkswagen, BMW and Nissan.
The expanding auto commerce has helped vault Mexico into becoming the United States’ principal trading partner, eclipsing both China and Canada. U.S.-Mexico bilateral trade approached $840 billion in 2024, according to the U.S. trade representative’s office.
Some experts have warned that Trump’s far-reaching tariff proposals could send Mexico’s economy — already experiencing slow growth and lagging investor confidence — into a recession.
“Whatever blow we receive reverberates in the entire economy,” Francisco González, president of the National Industry of Auto Parts, told Mexico’s El Heraldo Radio.
During his first presidential term, Trump condemned NAFTA as “the worst trade deal ever made,” blaming the pact for encouraging U.S. firms to seek cheaper labor in Mexico, thus hollowing out the U.S. manufacturing base. Trump negotiated NAFTA’s successor, the United States-Mexico-Canada Agreement, or USMCA, which went into effect July 1, 2020.
A key reform of USMCA was a requirement for bolstering North American content for vehicles receiving preferential tariff treatment. USMCA increased regional content mandates from 62.5% to 75% for cars and light trucks and to 70% for heavy trucks.
The content rules reflect the complex nature of contemporary automotive manufacturing, heavily reliant on international supply chains and components shipped across borders.
In his auto tariff order on Wednesday, Trump included specific carve-outs for importers in Mexico and Canada operating under USMCA.
The 25% tariff would apply only to non-U.S.-produced content in automobiles imported under the North American free trade regimen, Trump said. Importers would be given the chance to “certify” U.S. content, Trump said.
In addition, Trump said that auto parts imported under USMCA would remain tariff-free until U.S. authorities establish a process to apply duties only to content not originating in the United States.
Mexican authorities called the proposed tariff hikes difficult, if not impossible, to implement.
Mexican components often constitute 40% of U.S.-made vehicles, said Ebrard, who cited the example of an auto piston that might cross the border seven times.
“Do you charge a 25% tariff seven times?” Ebrard asked. “That’s not going to happen.”
On two previous occasions, Trump has paused planned tariffs on all Mexican and Canadian imports after speaking via telephone with Sheinbaum. He has also lavished plaudits on the Mexican president, calling her “tough” and a “marvelous woman.”
Trump has also praised Mexico for helping to reduce U.S.-bound illegal immigration and drug smuggling — the problems that he originally cited in vowing to impose duties on Mexican and Canadian imports. However, in implementing the auto tariffs, Trump has not cited immigration or drug trafficking. Instead, he argued Wednesday that he was acting “to protect America’s automobile industry, which is vital to national security and has been undermined by excessive imports threatening America’s domestic industrial base and supply chains.”
Special correspondent Cecilia Sánchez Vidal contributed to this report.
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