The tariffs the incoming Trump administration plans to implement may present obstacles for the automotive supply chain across North America, according to Automotive Logistics.
A 25% tariff on all goods from Canada and Mexico, along with an additional 10% on all Chinese goods, would be implemented via an executive order after Trump is inaugurated in January.
It isn’t clear whether the tariffs will apply to finished vehicles, or all the parts and materials making up a vehicle. In the case of the latter, it would be a big hit to the North American automotive supply chain, with experts estimating that Mexico currently supplies up to 40% of the value of parts in US-built vehicles.
“There are components that cross the US-Mexico border multiple times before they get installed in a vehicle,” explained Mike Wall, executive director of automotive analysis at S&P.
Francisco N. González Díaz, executive president of Mexican parts manufacturer Industria Nacional de Autopartes, has claimed that 43% of the parts the U.S. buys worldwide are from Mexico, with Canada sitting in second place at 11%.
The tariffs would also violate the US-Mexico-Canada Trade Agreement, which was set to be in place until 2026 when it would come under review. Years of negotiations were expected to follow.
“If you want to change your suppliers in this sector you have to develop them for the next 10 years,” said González Díaz. “This is a very strong backbone.”
