Mexico City (EFE) .- The Mexican automotive industry faces a moment of uncertainty for the intention of the US government to modify the rules of operation of the Mexico Treaty, the United States and Canada (TMEC), which could alter the productive integration model that the sector has developed for more than 30 years, warned on Wednesday the Mexican Association of the Automotive Industry (AMIA).
“The industry is in an ‘impasse’ waiting to see what finally happens (…) Now the date that is important is April 2, to see what will happen (…) Of course the industry faces a risk, a change in the operation model,” said Rogelio Garza, president of the AMIA, in the ‘North Economic’ Podcast of Grupo Financiero Banorte.
Garza recalled that President Donald Trump has already imposed tariffs before the products outside the TMEC, so he revealed that only 9% of automotive production would not be exempt from the treaty.
“Everything that meets the treaty in the automotive sector is about 91% (…) Of course there are 9%, which do not meet and that we are seeing what it is or how (…) so that the Mexican market can remain attractive,” he said.
Garza explained that, if tariffs or sanctions were imposed, the three countries of North America would be automatically affected due to the high interdependence of supply chains.
Lee: Autartes that meet the TMEC will not be subject to tariffs, for now
A resilient and strategic industry
The automotive industry in Mexico had a historical performance in 2024: almost 4 million manufactured vehicles, of which 3.6 million were exported, 80% of them to the United States.
These results placed Mexico as the fifth world producer of vehicles, after having occupied the seventh place in 2023.
The automotive industry represented almost 5% of Mexican GDP at the close of 2024 and its products represent 32% of the total exports of Mexico, according to Odracir Barquera, general director of the AMIA.
In addition, he stressed that it is the main generator of foreign exchange in the country, above remittances and tourism.
Lee: ‘Free trade disaster’ ends: EU guild when applauding tariff to cars
Impact of changes in rules of origin
Barquera pointed out that, with the entry into force of the TMEC in 2020, the rules of origin were hardened with respect to the previous treaty, the North American Free Trade Agreement (NAFTA): 62.5 % passed to 75 %, in addition to demanding labor content and regional purchases of steel and aluminum.
This made the TMEC “the strictest treaty in the world with the automotive industry”, which forced a readjustment in the production chains and additional investments.
Barquera emphasized that Mexico has been implementing ‘Nearshoring’ for three decades, attracting not only shipowners, but also to auto parts suppliers, which positions the country as the fourth world producer in that field. Among the key factors for attracting investment, he mentioned the geographical location, access to commercial treaties and logistics infrastructure.
“You have to have a lot of cold head so as not to respond in what is not and be very clear on April 2 to see what will come with the new announcement of the American government,” Garza warned.
Lee: Canada describes cars tariffs as a ‘direct attack’
The challenge of Chinese competition
Garza acknowledged that the arrival of brands from China to the country represents another challenge that must be carefully analyzed in coordination with the Mexican government, considering both the domestic and export market.
“In recent years we have seen an arrival of a lot of Chinese brands to our country and this clearly leads us to have to analyze how the dynamics of the sector are taking place in our country,” said Alejandro Padilla, chief economist of Banorte.
Despite the risks, AMIA considers that the structural strength of the industry and its deep regional integration will overcome this critical stage.
“Of course there is a threat, but I believe that this threat will end up solving it during the following months in favor of the automotive industry,” Garza said.
With EFE information
Follow us on Google News to always keep you informed
