The US authorities has imposed tariffs of 25 p.c on all imports from Mexico and Canada. The measure promoted by Donald Trump threatens the free commerce system that the three international locations have maintained for greater than 30 years.
Even earlier than the affirmation that the tariffs went into impact on March 4, Marcelo Ebrard, head of the Mexican Ministry of Economic system (SE), warned that these taxes would symbolize an approximate price of $20.5 billion {dollars} for about 89 million American households. He additionally warned of the potential inflationary affect on merchandise corresponding to computer systems, televisions, fridges, agricultural items, auto elements, and autos.
Mexico is a key buying and selling associate for the US. Between January and November 2024, Mexican exports totaled $466.6 billion, whereas American exports reached $309.4 billion.
In Mexico, these charges will notably have an effect on the automotive and electronics sectors. The automotive and electronics industries symbolize roughly 46 p.c of Mexican gross sales, with a mixed worth estimated at $200 billion.
The Automotive Trade Is at Threat
The automotive trade has proven important regional integration beneath the United States-Mexico-Canada Settlement (USMCA). This settlement permits international corporations that produce in Mexico or Canada and use domestically sourced supplies to export their merchandise to the US at low tax charges.
The Trump administration has argued that this situation has been exploited by China to strengthen its automotive trade. Mexico has turn into the third-largest exporter of autos worldwide. Between 2022 and 2023, its gross sales grew by 14.33 p.c and reached a worth of 188.9 million {dollars}, in response to the World Commerce Group. Most of those models are shipped to the US, though the origin of many might be traced again to China, which has established itself as Mexico’s most important auto provider with exports reaching $4.6 billion in 2023, in response to the SE.
Mexico’s Nationwide Auto Elements Trade (INA) has warned that the imposition of tariffs on Mexican imports will weaken commerce, scale back competitiveness within the area, and have an effect on financial stability. In an announcement, it confused that the automotive and auto elements sector is a pillar of North American exports, with the capability to generate greater than 11 million jobs within the USMCA international locations. The affiliation foresees that assemblers in Mexico might scale back manufacturing by as much as a million models this 12 months because of the new taxes, which might have an effect on product availability, job creation, and the provision chain.
The principle states producing automotive elements in Mexico are Mexico Metropolis, Chihuahua, and Nuevo Leon. Specialists say that essentially the most affected corporations can be assemblers of US, Japanese, and European origin. Ebrard has estimated that the brand new tax burden would have an effect on 12 million households in the US, with a rise in spending of as much as $10.4 billion on this space. For example, he identified that 88 p.c of the pickups bought in the US come from Mexico and are assembled by corporations corresponding to Common Motors, Ford, and Stellantis.
The Minister of Economic system emphasised that the tariffs would symbolize the US capturing itself within the foot, as it might straight affect its personal automotive corporations, which rely on Mexican manufacturing to provide their home market.
Electronics Costs on the Rise
The electronics and equipment sector may even be affected. In November 2024, Mexican exports {of electrical} and digital gear reached $8.9 billion, 88.8 p.c of which have been destined for the US. The manufacturing of those units is concentrated in Baja California, Chihuahua, and Nuevo León, the place hundreds of jobs and meeting vegetation might be in danger.
Trump’s tariffs can have important implications for US shoppers. An SEC research estimates that the extra levy would price an additional $7.1 billion for 40 million households buying computer systems. Likewise, it’s anticipated that round 32 million households would pay as much as $2.4 million extra {dollars} when buying new screens, and round 5 million households would assume an additional expense of $817 million when buying fridges.
