According to Eugenio Grandio, CEO of Electro Movilidad Asociación (EMA), this threat represents a significant challenge for the interconnected automotive industries of Mexico, Canada and the United States. In an email interview with Coops de l’information, Mr. Grandio stated that 77% of vehicles and 64% of automobile parts produced in Mexico are intended for the American market. As for the Canadian market, Mexico only exports 8% of its production.
“If Mexico were to implement reciprocal measures toward any of the other countries, it could drive up prices for all consumers and businesses, further complicating trade relations in North America.”
— Eugenio Grandio, PDG d’Electro Mobility Association
If there is an increase in vehicle prices, this could dampen demand, according to the CEO of EMA, the Mexican equivalent of Electric Mobility Canada.
“Which would potentially lead to production cuts and job losses in Mexico’s automotive sector, a key pillar of the economy. Furthermore, the American automobile industry would not be immune to these effects,” he adds.
As with Canada, many components produced in Mexico cross the border into the United States several times during the production process. “Customs duties on these parts would increase the cost of vehicles assembled in the United States, which would have an impact on both automakers and consumers,” adds Mr. Grandio.
Canadian reactions
How is it possible to obtain information from the Mexican side, rather than the Canadian side? The two associations representing Canadian interests in automobile manufacturing are rather discreet.
“We are obviously aware of comments made on a range of forums by President-elect Trump on possible 25% tariffs placed on all Canadian imports into the United States. At this stage, these are still only comments and not an official policy,” responded by email Patrice Maltais, director of stakeholder relations and Quebec affairs at Global Automakers of Canada (GAC).
“That said, we take these comments seriously and are monitoring the situation closely as it could have a significant negative impact on the overall economy,” he adds.
GAC represents the Canadian subsidiaries of Asian and European manufacturers. The counterpart for North American manufacturers — Ford, GM and Stellantis — the Canadian Vehicle Manufacturers Association did not respond to emails from Soleil.
An outdoor exhibition of cars from the Chinese manufacturer BYD in Mexico (Electro Mobility Association)
Chinese EVs assembled in Mexico?
Could producing Chinese electric vehicles (EVs) in Mexico avoid import penalties? It wouldn’t be that simple.
Since October 1, 2024, Chinese electric vehicles imported into Canada are subject to 100% customs duties. Ottawa then followed in the footsteps of the Biden administration which imposed such penalties in order to protect the local automobile industry.
However, it is rumored that Chinese automobile manufacturers are eyeing Mexico to produce their vehicles there which could be sold in the countries covered by the Canada-United States-Mexico Agreement (CUSMA).
-“But the idea is not as simple as it seems,” replies Mr. Grandio.
“Currently, no Chinese electric vehicles are produced in Mexico,” he mentions. “The only related activity involves a Mexican company that assembles vehicles under a licensing agreement with the Chinese brand JAC.”
Eugenio Grandio, PDG d’Electro Mobility Association (Electro Mobility Association)
Chinese automakers interested in building vehicles in Mexico are focused on supplying the Mexican and Latin American markets, according to EMA’s CEO.
“These companies are attracted by Mexico’s strong automotive supply chain, with more than 600 suppliers, its network of more than 50 free trade agreements, a growing domestic market and relatively low manufacturing costs,” explains- he.
“To export vehicles from Mexico to the United States and Canada under CUSMA, those vehicles must comply with strict content rules and other trade regulations.”
— Eugenio Grandio, PDG d’Electro Mobility Association
These strict rules include wage standards and local component requirements. For Chinese electric vehicles to meet these criteria would require significant changes in supply chains, according to Grandio.
“Beneficial” for Mexico
He argues that from Mexico’s perspective, attracting Chinese electric vehicle manufacturing would be beneficial. “It could also accelerate the development of a new supply chain focused on electric vehicles, such as battery manufacturing,” he says.
However, concerns that would lead to additional regulations must also be factored into the equation. “Such as those related to cybersecurity, like what has been done with Chinese communications manufacturers,” says Mr. Grandio.
And as has been the case in the United States and Canada, Mexico has flirted with the possibility of imposing customs duties on vehicles manufactured in China.
“This could have significant implications for U.S. automakers operating in Mexico. GM, for example, is the second largest seller in the Mexican market and more than 80% of its local sales come from vehicles manufactured in China,” he says.
“And Ford’s local sales include up to 25% of cars made in China. Such tariffs would not only affect Chinese automakers, but could also disrupt the operations of these American companies in Mexico,” concludes the CEO of EMA.
