Mexico, Canada and the European Union on Tuesday condemned U.S. President Donald Trump’s decision to impose 25% tariffs on global steel and aluminum imports starting next month.
But it is Trump’s recent declaration about Mexico’s automobile exports — made during an interview broadcast on Monday — that could prove to be even more contentious.
#PorSiNoLoViste | Donald Trump advirtió que va poner aranceles a los autos producidos en México. pic.twitter.com/S8vd0D4ioh
— Azucena Uresti (@azucenau) February 11, 2025
“We have a deficit with Mexico of 350 billion dollars. I’m not … gonna let that happen,” Trump told Fox News. “In the meantime, they are building car plants in Mexico in order to sell cars in the United States. … I say no way, you’re not gonna do that. We’re going to put big tariffs on those cars.”
Mexico sends nearly 80% of the cars it produces to the U.S., according to the Council on Foreign Relations (CFR), amounting to some 2.5 million vehicles each year. In addition, the U.S. imports nearly half its auto parts from its northern and southern neighbors.
Trump has said higher tariffs would spur both U.S. and foreign companies to create more auto sector jobs in the U.S. but economists are skeptical, insisting that most costs would simply trickle down to U.S. consumers.
A 25% tariff on cars imported from Mexico would raise production costs for U.S. automakers, CFR writes, adding up to US $3,000 to the price of some of the roughly 16 million cars sold in the United States each year.
Because the US, Canadian & Mexican automotive industries are so highly integrated, many cars sold and assembled in the United States today have high shares of Canadian and Mexican value-added – inputs that would be suddenly subject to high tariffs (taxes).
3/x pic.twitter.com/evpb6ZryDM
— Cato Trade (@CatoTrade) January 30, 2025
According to an analysis by S&P Global Mobility cited by CBS News, the average $25,000 price of a car imported from Mexico could jump $6,250 if the tariffs take effect.
“The tariffs would really hit the automobile industry hard because the motor vehicle industries of the U.S., Mexico and Canada are very intertwined,” Marcus Noland, trade policy expert at the Peterson Institute for International Economics, told CBS MoneyWatch.
“Parts will cross the border seven to eight times before final assembly, and the tariffs are applied every time a part crosses — so costs would go up very quickly.”
Twelve auto manufacturers with factories in Mexico — including Audi, Ford and Volkswagen — would see large-scale disruption from 25% tariffs, and Noland said that they could “tank” the Mexican economy given how dependent it is on automobile exports to the U.S.
“If [automanufacturers in Mexico] start going belly up, you’ll have unemployed people along the U.S. border,” Noland said. “[T]he ironic thing is one of the reasons for [Trump’s] action was illegal migration, and it could actually incentivize illegal migration. By damaging the Mexican economy, you would probably increase the levels of illegal migration.”
With reports from CBS News, Council on Foreign Relations, Reuters and Fox News
Well, I’m glad I sold my GM stock. Ford, GM and even honorary U.S. President Now in Charge Musk’s Tesla have major manufacturing plants in Mexico — whole cars and service parts and components.
Mexico is where Ford recently announced the mega expansion of its parts and components factory to build its first all-electric vehicle.
Mexico and Canada, of course, have been with the U.S. for their mutual free-trade agreement, which Trump personally managed to renegotiate during his first term and boasted/bragged what an outstanding job he did to come out on top.
The sad thing is that we ain’t seen nothin’ yet with this guy.
DJT wants to annex Greenland and Canada as his buddy Vlad did with the Ukraine. Before the last election, he commented that Vlad was a genius in how he invaded the Ukraine . He looked quite pleased when he made the statement !
We get what we deserve in our republic.
Tesla does not have a plant in Mexico. The only reason why automakers (or any manufacturer) locates in Mexico is to take advantage of lax labor and environmental laws. It’s exploitive. I support Trump’s tariffs. Products should be manufactured in the country in which it is consumed.
So, I suppose you think the US shouldn’t be able to export agricultural products (corn, soy beans, wheat), planes from Boeing, banking services, liquefied gas or pork. That woukd put the US in 3rd world status. That doesn’t seem like a very good plan.
How much more stupid is it possible for trump and his goofy sad band of actors to be about basic economics. It’s just unbelievable…wtf
Not that long ago it was democrats who favored, and passed, tariffs. It’s the fault of both sides.
I can’t imagine the crap they’re going to try and pull leading up to the midterms
For all you economists, there is a lot of if, and’s or but’s in this article. The consumer will decide who eats the tariffs. For the Mexico economy, taxation, corruption and decades of self serving socialist leadership has destroyed any chance of self reliance for the Mexican people. The joke is on you…..
KJ
The joke is on WHO precisely ?
Trump and his MAGA cult don’t seem to understand that these tariffs will just make costs go up dramatically in the USA. The MAGA cult seen very non educated it seems.
Make America BROKE Again
Bill (Memo) Layman
And would it be any better under Biden or Harris ??
Yea
In terms of democracy, hell yes. In terms of corruption, only somewhat better under Biden but probably much better under ex-prosecutor Harris. In terms of economics, far less chaos although with spending diarrhea.
I am for AMERICA FIRST, i.e., the Continent (there is no country in the world called “America”. Why not tariff Japan, China, Korea, etc.?!?
It’s pretty obvious that Trump has been — and maybe still is — completely ignorant of the number of automobile and truck manufacturing plants in México. When he says “they are building car plants in Mexico in order to sell cars in the United States,” it clearly sounds like he didn’t realize that there were ALREADY many such plants in México. When we lived on the US/México border, we saw hundreds of Ford products crossing into AZ by rail from Hermosillo. And when we lived in Cuernavaca, we walked by the huge Nissan plant in CIVAC almost every day. He’s so clueless, and his handlers aren’t any better informed. Of course, he could ask his buddy, Elon Musk, who may know something about the subject.
Musk has a Tesla manufacturing plant project in Mexico.
It’s mothballed. It will never get started.
Trump his MAGA base seem to ignore how capitalism works The US companies went there for cheaper labor. The Cartels didn’t force them. Punish or pass laws against Musk planned Mexico Tesla plant ? The only stop is those in national security or declared as weapon systems. Passing a tariff on US buyers is irrational