The threat of 25% tariffs on auto exports to the United States has prompted Nemak, among the world’s largest auto industry suppliers, to consider moving some production operations from Mexico to the U.S.
Nemak, headquartered near the northern industrial city of Monterrey, Nuevo León, is a global automotive parts manufacturer that specializes in aluminum components.
While delivering the company’s fourth-quarter earnings report last week, Nemak CEO Armando Tamez conceded that shifting some operations to the U.S. is a possibility, but “only if it makes economic sense.”
This month, U.S. President Donald Trump ordered 25% tariffs on all steel and aluminum imports, applied then paused tariffs on all goods imported from Mexico, and recently suggested that tariffs would be applied to all auto imports beginning on April 2.
Tamez dismissed the impact of the tariff threats, the newspaper El Financiero reported, citing ongoing trade negotiations between Mexico and the U.S. Still, he said, the company must analyze all possible scenarios.
Nemak supplies auto parts to every major vehicle manufacturer operating plants in Mexico, including General Motors, Ford, Toyota, Stellantis and Nissan.
If Nemak’s clients move operations to the U.S. — Nissan is said to be considering it — Nemak could have its auto parts taxed directly under the new tariffs.
Tamez said the company currently has limited capacity in the U.S. and its plants there — one in Kentucky, the other in Alabama — are unable to increase production.
“So if we were to move operations to the U.S. from Mexico, it would have to make economic sense for Nemak,” he said, adding that prices would undoubtedly rise because “the cost of doing business in the U.S. is higher than that in Mexico.”
Nemak has seven facilities in the state of Nuevo León and two others in the state of Coahuila. It also has aluminum recycling and remanufacturing operations in Nuevo León.
Earnings report overshadows Nemak’s realignment strategy
In its 4Q earnings report, Nemak, a subsidiary of the Mexican industrial conglomerate Alfa, disclosed that although revenue grew by 6% year-to-year to US $1.2 billion in the final three months of the year, company revenue was down 1.7% in 2024.
While analyzing a partial move to the U.S., Nemak is amid a strategic adjustment to its operations that seeks “to align its resources and investments with changing market demands and customer needs.”
In early January, the company postponed new facilities in Mexico and Germany. These paused operations were to involve the production of battery housings for fully electric vehicles within the e-mobility, structure and chassis applications, according to Mexico Industry.
With reports from El Financiero, Mexico Industry and Bloomberg News
The title of this article is greatly misleading. Nemak is thinking of making a “partial” move, not as the title seems to imply Nemak is moving all production. And the two U.S. plants Nemak has now “are unable to increase production.”
Well.. how ’bout that. Viva the Trumpster?
Opinion Comment: Nemak’s Strategic Shift & the Impact of the “America First Investment Policy” on North American Trade,
This article provides an important overview of Nemak’s response to Trump’s 25% auto tariff threats and the possibility of shifting production to the United States. However, while it captures the immediate factors influencing Nemak’s considerations, it does not explore the broader implications of U.S. trade and industrial policy, the feasibility of such a move, or the cascading effects on North America’s auto industry.
With the recently announced “America First Investment Policy,” which prioritizes domestic manufacturing, tax incentives for reshoring, and reduced reliance on foreign production, this situation extends beyond simple tariff concerns. Nemak’s potential relocation is not just about economics but also about political and policy-driven pressure that could reshape the entire North American supply chain.
1) Is Nemak’s Move Economically Viable? Or Is This Political Posturing?
Nemak CEO Armando Tamez was clear that a U.S. move would only happen if it makes economic sense, yet this article does not fully assess the financial feasibility of such a shift.
Higher U.S. Labor & Operational Costs
Mexican auto industry wages range from $3 to $8 per hour, while U.S. wages start at $20 per hour for similar positions.
Relocating production would significantly increase labour costs, reducing profitability.
Limited U.S. Manufacturing Capacity
Nemak’s U.S. plants in Kentucky and Alabama are already at full capacity.
Expansion would require major capital investment, regulatory approvals, and years to implement.
Even if Nemak moves, will its supply chain follow, or will it still rely on cross-border trade?
Tariffs Alone May Not Justify the Move
While tariffs are a concern, they could be short-term bargaining tools rather than long-term policy shifts.
Would Nemak be making a major decision based on a trade policy that may change with the next administration?
✔ Key Takeaway: This article could further analyze whether Nemak’s statement is a genuine economic consideration or a strategic move to align with shifting U.S. trade policies and apply pressure in ongoing negotiations.
2) The “America First Investment Policy” and U.S. Trade Strategy: A Bigger Factor Than Tariffs?
The article focuses on tariffs but does not acknowledge the newly released “America First Investment Policy,” which could have a much larger influence on Nemak’s decisions.
Incentives for U.S. Manufacturing Growth
The policy prioritizes reshoring U.S. industrial production through tax credits, subsidies, and investment incentives for companies relocating from foreign markets.
This reduces the cost burden of moving operations to the U.S., even if production is more expensive.
Long-Term Shift Toward Localized Supply Chains
The policy discourages outsourcing and globalized supply chains, pushing companies like Nemak to consider “Made in America” mandates to remain competitive.
Even without tariffs, U.S. automakers may prefer to source from domestic suppliers to align with federal incentives.
Political & Trade Pressure Beyond Tariffs
The U.S. is pressuring Mexico to align with its trade policies, including imposing tariffs on Chinese imports to counterbalance U.S. restrictions.
Mexico may soon have to choose between protecting its manufacturing sector or making economic concessions to maintain trade access.
✔ Key Takeaway: Tariffs may be a temporary measure, but the broader U.S. policy shift toward reshoring is a longer-term strategic threat to Mexico’s industrial base. The article could explore whether Nemak’s move is a reaction to this broader policy rather than just a response to tariffs.
3) The Domino Effect: What If Nemak Moves?
Nemak is a major supplier for companies like General Motors, Ford, Toyota, Stellantis, and Nissan—if it moves operations, will other manufacturers be forced to follow?
The North American Auto Industry Is Built on an Integrated Supply Chain
USMCA was designed to balance production between Mexico, the U.S., and Canada.
If the U.S. forces manufacturers to move, this could trigger supply chain instability, higher vehicle prices, and production inefficiencies.
Could Mexico Retaliate?
If U.S. policies force companies to relocate, will Mexico respond with counter-tariffs or industrial incentives to retain businesses?
This could escalate trade tensions and disrupt North America’s economic integration.
✔ Key Takeaway: This article could discuss the chain reaction that could occur if Nemak moves—what it means for automakers, suppliers, and the long-term stability of Mexico’s manufacturing economy.
4) Mexico’s Response: How Can It Protect Its Auto Industry?
The article does not explore how Mexico plans to respond to these economic and policy pressures.
Will Mexico Introduce Counter-Incentives?
Could Mexico offer tax breaks or subsidies to manufacturers who remain in the country?
Will it negotiate a trade compromise with the U.S. to prevent an exodus of auto companies?
Will Mexico Align with U.S. Policy to Maintain Trade Stability?
Could Mexico be pressured into adopting similar tariffs on Chinese imports to stay in the U.S.’s good graces?
How much leverage does Mexico actually have in these negotiations?
✔ Key Takeaway: Future reporting could examine how Mexico plans to navigate these shifts—whether through economic incentives, trade negotiations, or countermeasures.
5) A Misleading Headline? The Reality of Nemak’s “Move”
One of the major weaknesses of this article is the headline, which implies a definitive relocation when Nemak is merely considering its options.
CEO Armando Tamez explicitly stated that a move would only happen “if it makes economic sense.”
The U.S. plants are at full capacity—there is nowhere for production to go unless Nemak builds new facilities.
Tariffs may be temporary—should companies really make long-term decisions based on short-term threats?
✔ Key Takeaway: A more accurate headline would clarify that Nemak is analyzing possibilities rather than committing to a move. This is a strategic evaluation, not a confirmed relocation.
Final Thoughts: Key Areas for Future Exploration
While this article provides a solid overview of Nemak’s announcement, it lacks a deeper exploration of the broader policy and trade dynamics influencing this decision. Future reporting could consider:
✔ Is Nemak’s move truly economic, or is it a strategic response to U.S. trade pressures?
✔ Does the “America First Investment Policy” create stronger incentives than tariffs alone?
✔ How would this impact the entire North American auto supply chain?
✔ What countermeasures will Mexico implement to prevent further industrial losses?
✔ Could U.S. automakers prefer domestic suppliers even if tariffs are lifted?
The bigger picture is that Nemak’s potential shift is part of a larger geopolitical and economic shift, not just a company-specific decision. The U.S. is pushing to restructure its manufacturing base, and Mexico must determine how to retain its industrial leadership in the face of these pressures.
By addressing these larger strategic issues, future articles can offer a more comprehensive and insightful analysis of what’s really at stake for North American trade.