Trump’s Tariff on Mexico Takes Effect Tuesday- Audi, BMW in the Crosshairs

The United States is set to impose tariffs on automobile imports from Canada and Mexico, a move that could significantly impact major automakers.

The tariffs, which may reach 25%, primarily target vehicles and parts imported from Mexico, potentially disrupting production, supply chains, and trade dynamics in the North American auto industry.

The tariffs are scheduled to take effect on Tuesday, but their final rate will be determined by President Donald Trump, according to Commerce Secretary Howard Lutnick, as per Economic Times news report. Here’s a look at the automakers that could be affected:

Luxury Automakers: Premium Brands at Risk

• Audi: Volkswagen-owned Audi’s facility in San Jose Chiapa, Mexico, produces the Q5 SUV. With over 5,000 workers employed at the plant, nearly 40,000 units were shipped to the US in the first half of 2024.

• BMW: BMW’s San Luis Potosí plant manufactures models like the 3 Series, 2 Series Coupe, and M2, most of which are exported to the US and other international markets.

American Auto Giants: Heavy Exposure to Tariffs

• Ford: Operating three plants in Mexico, Ford exported nearly 196,000 vehicles to North America in early 2024, with 90% of shipments directed to the US, as per Economic Times news report.

• General Motors (GM): One of the most affected companies, GM imported approximately 750,000 vehicles from Mexico and Canada in 2024. Key models such as the Chevy Silverado, GMC Sierra, and mid-sized SUVs are assembled in Mexico. The country is also home to the production of GM’s latest electric vehicles.

Japanese Automakers: Heavy Reliance on Mexican Production

• Honda: With 80% of its Mexican-produced vehicles exported to the US, Honda has warned of possible production shifts if tariffs become permanent, as per Economic Times news report.

• Mazda: Mazda shipped around 120,000 vehicles from Mexico to the US in 2023, and the company is assessing whether future investments in the country remain viable.

• Nissan: With two production plants in Mexico, Nissan produces models like the Sentra, Versa, and Kicks for the U.S. market, manufacturing approximately 505,000 vehicles in the first nine months of 2024.

• Toyota: Toyota builds its Tacoma pickup truck in Mexico, accounting for over 230,000 units sold in the US in 2023, representing 10% of its total US sales.

South Korean and Chinese Automakers: Expanding Mexican Operations

• Kia: Kia’s Mexico plant exports various vehicles, including Santa Fe SUVs for its Hyundai affiliate, to the US.

• JAC Motors: This Chinese automaker produces vehicles in Mexico through a joint venture with Giant Motors, a local Mexican firm.

Volkswagen Group: Broad Impact Across Brands

• Volkswagen: The German automaker’s Puebla plant manufactured nearly 350,000 vehicles in 2023, including the Jetta, Tiguan, and Taos—models primarily exported to the U.S. Volkswagen is also investing in a battery gigafactory in Ontario, Canada, with production set to begin in 2027.

Conclusion

With these tariffs set to take effect, automakers may face higher costs and potential shifts in production strategies. The long-term impact remains uncertain, but affected companies will need to assess their supply chains and pricing strategies to navigate these challenges.

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