The US authorities has imposed tariffs of 25 % on all imports from Mexico and Canada. The measure promoted by Donald Trump threatens the free-trade system that the three nations 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 Financial system, warned that these taxes would symbolize an approximate value of $20.5 billion for about 89 million American households. He additionally warned of the potential inflationary impression on merchandise equivalent to computer systems, televisions, fridges, agricultural items, auto elements, and automobiles.
Mexico is a key buying and selling companion for the USA. Between January and November 2024, Mexican exports totaled $466.6 billion, whereas American exports reached $309.4 billion.
In Mexico, these tariffs will significantly have an effect on the automotive and electronics industries, which symbolize roughly 46 % of Mexican exports, with a mixed worth of round $200 billion.
The Automotive Trade Is at Danger
The automotive trade has proven important regional integration underneath the United States-Mexico-Canada Settlement (USMCA). This settlement permits international firms that produce in Mexico or Canada and use regionally sourced supplies to export their merchandise to the USA at low tax charges.
The Trump administration argues that this situation has been exploited by China to learn its auto trade. Mexico has turn out to be the third-largest exporter of automobiles worldwide. Between 2022 and 2023, its gross sales grew by 14.3 % and reached a worth of $188.9 million, in keeping with the World Commerce Group. Most of those models are shipped to the USA, though the origin of many could be traced again to China, which has established itself as Mexico’s major auto provider, with exports reaching $4.6 billion in 2023, in keeping with the Ministry of Financial system.
Mexico’s Nationwide Auto Elements Trade 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 a press release, it burdened 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 nations. The affiliation foresees that assemblers in Mexico may scale back manufacturing by as a lot as 1 million models this 12 months as a result of 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 León. Specialists say that probably the most affected firms could 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 USA, with a rise in spending of as much as $10.4 billion on this space. For example, he identified that 88 % of the pickups offered in the USA come from Mexico and are assembled by firms equivalent to Common Motors, Ford, and Stellantis.
The minister of economic system emphasised that the tariffs would symbolize the USA capturing itself within the foot, as it will instantly impression its personal automotive firms, which rely upon Mexican manufacturing to provide their home market.
Electronics Costs on the Rise
The electronics and equipment sector will even be affected. In November 2024, Mexican exports {of electrical} and digital gear reached $8.9 billion, 89 % of which was destined for the US. The manufacturing of those gadgets 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 customers. An SEC examine estimates that the extra levy would value 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 when buying new displays, and round 5 million households would assume an additional expense of $817 million when buying fridges.
