“We believe the financial impact of the tariff alone will be manageable for most [European] automakers, but the tariffs add to what is an already challenging market environment for 2025,” said Lukas Paul, auto director at S&P Global Ratings.
A long-standing trade agreement among the U.S., Mexico and Canada created permeable borders that has integrated the North American auto industry. Many companies use Mexico as a low-cost production site thanks to its proximity to the U.S.
Close to 90 percent of vehicles produced in Mexico are exported, with three-quarters directed to the U.S., according to data from the U.S. Department of Commerce.
During his last term, Trump set his sights on Mexico over concerns that Chinese automakers would use the country as a back door to sell their vehicles in the U.S. In response, he negotiated a new trade agreement, called the USMCA, that went into effect in July 2020 with updated rules of origin for cars.
Under the pact, 75 percent of a vehicle’s content has to be produced in North America, with core parts originating from the U.S., Canada or Mexico. The agreement is set for a review in mid-2026, but on the campaign trail, Trump indicated he would take action before then.
Carmakers most at risk
Today, Audi, BMW, Mercedes-Benz, Stellantis and Volkswagen all have operations in Mexico.
