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By KELIN DILLON

Though Mexico was spared from many of U.S. President Donald J. Trump’s sweeping global tariffs, the nation must still grapple with the 25 percent tariff enacted on auto manufacturing in Mexico – an issue national political leaders and international manufacturers are reckoning with as Mexico’s status as the 6th largest car producer in the world now comes under threat.

While cars made in compliance with the United States–Mexico–Canada Agreement (USMCA) won’t be subject to the economic sanctions, any cars made in Mexico with too many parts sourced from outside the trade agreement will still be subject to tariffs.

As a result, the Mexican auto industry is expected to face up to a 10 percent drop by the end of the year, automotive sector expert Eric Ramírez told daily newspaper El Financiero.

“I would expect something gradual, perhaps a 5 percent drop, at most 10 percent. In Mexico’s case, Nissan and Volkswagen could be the hardest hit. Volkswagen, because it has a lot of German content, isn’t meeting the 75 percent USMCA threshold, so it will have to make more investments in the region or bring in more components from the US,” said Ramírez.}

This trend is spurred on by U.S. manufacturer Stellantis’ decision to pause manufacturing at its Canadian and Mexican plants and Nissan’s restructuring of its manufacturing and export strategies out of Mexico.

However, no matter automakers’ moves, Trump’s tariffs are still set to pass on major price hikes to the average U.S. consumer.

“Ultimately, American consumers will end up paying 18 percent more for vehicles,” said Ronald Berger partner Oscar Silva.

Meanwhile, Mexican political parties – particularly the conservative National Action Party (PAN) – are urging President Claudia Sheinbaum Pardo (CSP) to take more significant action to protect Mexico’s auto industry.

On Monday, April 7, PAN President Jorge Romero Herrera presented a plan requesting that Sheinbaum’s administration implement tax incentives to businesses of all sizes in the automotive sector, offer full deductions of tariff expenses on income tax, suspend Mexico’s New Car Tax when said vehicles reach a certain tariff threshold and create unemployment insurance specifically geared toward affected automotive industry workers.

This is not a time for political calculations; it’s a time for unity and for clearly defending national industry,” said Romero Herrera. “We’re not going to criticize for the sake of criticizing; we’re going to propose and demand what the country needs.”