The United States faces the challenge of investing up to $50 billion in new automotive manufacturing facilities and building up to 18 new assembly plants due to the imposition of tariffs of up to 25 percent, as well as the possible application of a tariff on completely manufactured cars in Mexico.
Gabriel Padilla, general director of the National Auto Parts Industry (INA), warns that in the case of widespread tariffs, U.S. imports could decrease by up to 15 percent and car sales could drop by 1 million units in the United States. Additionally, there is the threat of a new 50 percent tariff on steel and aluminum.
If widespread tariffs are applied, supply chains would be severely affected, negatively impacting the production and export of vehicles. About 50-60% of a car's weight is related to steel, and 30% of parts and components are intensive in aluminum usage, meaning that tariffs would also affect the supply chain.
Although Mexico has the industrial capacity to meet the demand, problems would arise with prices and production costs. Various executives from major manufacturers warn about a possible escalation of costs associated with tariffs and the resulting chaos. However, Padilla emphasizes that there is still room for negotiation and the search for alternatives.
Specific applications of the tariffs, gathered in executive orders, are expected to be known around March 12 or 13. There is a possibility of seeking exemptions from these tariffs through the USMCA. In an attempt to mitigate the effects and maintain competitiveness, companies must look for options to be more efficient and reduce costs amid this challenging scenario.
