The automotive sector in Mexico and the United States received a reprieve as the 25 percent tariffs pushed by Donald Trump were postponed until April 2. This sector is crucial to the Mexican economy, being the main export engine and the sector with the highest bilateral integration.
In Mexico, the automotive industry is the main branch of manufacturing exports, and its primary market is the United States, positioning the country as one of the four leading vehicle manufacturers worldwide. Throughout 2024, automotive exports from Mexico reached 193 billion 907 million dollars, representing 35 percent of all manufacturing exports. Furthermore, its contribution to the manufacturing GDP is 18 percent and it employs nearly one million people directly in the country.
Automotive manufacturing in Mexico is concentrated mainly in the states of Coahuila, Nuevo León, Guanajuato, Puebla, State of Mexico, Aguascalientes, and San Luis Potosí, featuring the presence of large American companies such as General Motors, Ford, and Stellantis, which have plants in the country.
Mexico's dependence on the United States for vehicle production is significant, as 74 percent of the direct and indirect inputs used in vehicles manufactured in Mexico come from the United States. This makes the supply chain between both countries deeply integrated, crossing the border as many as eight times before being completed, which justifies the concern about avoiding tariff fees.
The Mexican Association of the Automotive Industry (AMIA) indicates that 80 percent of light vehicles exported have the United States as their final destination, and that 90 percent of the auto parts used in vehicle assembly in that country come from Mexico. Automotive trade is the most significant component of total trade in North America, representing approximately 22 percent of trade under the United States-Mexico-Canada Agreement (USMCA).
On the other hand, Foreign Direct Investment in auto parts in Mexico has experienced growth due to the USMCA, registering 2 billion 300 million dollars in the third quarter of 2024, reflecting an annual increase of 18 percent.
