The U.S. government imposes a 25% tariff on all imports from Mexico and Canada. Donald Trump has threatened three countries to maintain the free trade system for more than 30 years.
Even before confirming the tariffs came into effect on March 4, Mexico’s head of the Department of Economic Affairs Marcelo Ebrard warned that the taxes accounted for about $20.5 billion for about 89 million U.S. households. He also warned of the possible inflationary impact on products such as computers, TVs, refrigerators, agricultural supplies, auto parts and vehicles.
Mexico is the main trading partner of the United States. Between January and November 2024, Mexico’s total exports were US$466.6 billion, while the United States’ exports reached US$309.4 billion.
In Mexico, these tariffs will particularly affect the automotive and electronics industry, accounting for about 46% of Mexico’s exports and a total value of about $200 billion.
The automotive industry has risks
Under the United States-Mexico-Canada Agreement (USMCA), the automotive industry has shown significant regional integration. The agreement allows foreign companies to produce in Mexico or Canada and export their products to the United States at low tax rates using locally sourced materials.
The Trump administration believes that the situation has been exploited by China to benefit its automotive industry. Mexico has become the third largest vehicle exporter in the world. Its sales grew 14.3% between 2022 and 2023, worth $188.9 million, according to the World Trade Organization. Most of these units were shipped to the U.S., although many people have their origins back to China, which has established itself as the major automotive supplier in Mexico, hitting $4.6 billion in 2023, according to the Ministry of Economy’s exports.
The Mexican national auto parts industry warns that tariffs on Mexican imports will weaken trade, reduce the region’s competitiveness and affect economic stability. It stressed in a statement that the automotive and auto parts industry is the backbone of North American exports and has the ability to generate more than 11 million jobs in USMCA countries. The association expects that Mexico’s assembly providers may reduce production by up to 1 million units this year due to new taxes, which will affect product availability, job creation and supply chains.
The main states that produce auto parts in Mexico are Mexico City, Chihuahua and Nuevo León. Experts say the companies that are most affected will be the compilation providers of our Japanese and European descent. Ebrard estimates that the new tax burden will affect 12 million households in the U.S., with spending in the region increasing by $10.4 billion. For example, he noted that 88% of the pickups sold in the United States are from Mexico and are assembled by companies such as General Motors, Ford and Stratlandis.
The Economy Secretary stressed that tariffs would represent the U.S. foot shooting, as this would directly affect its own auto companies that rely on Mexican production to supply its domestic market.
Electronic prices rise
The electronics and appliance sectors will also be affected. In November 2024, Mexico’s electrical and electronic equipment exports reached US$8.9 billion, with 89% of which were destined to be the United States. The production of these equipment is concentrated in California, Chihuahua and Nuevo León, where thousands of jobs and assembly plants can be at risk.
Trump’s tariffs will have a significant impact on American consumers. The SEC study estimates that the additional tax will cost 40 million households who purchase computers an additional $7.1 billion. Likewise, about 32 million households are expected to add $2.4 million when purchasing a new monitor, while about 5 million households will bear an additional $817 million when purchasing a refrigerator.
