On March 4, the American-Mexican border was stopped. The trucks that Thor Salayandia planned to send through a checkpoint to the United States was seated in the lot. The only moving thing was confusion in the air.
Salayandia has and operates a factory in Juarez, Mexico, which manufactures automobile parts and shipped metal tube trucks in warehouses in the American state of Texas for assembly. During the last month, his business was thrown into turbulent waters.
“It becomes a political game … So for two days, there was a considerable reduction in traffic. Even American officials did not know whether to load the trailers who were crossing,” he said, referring to the pricing threats and the counter-menices between the United States and Mexico. “There are so many things at stake … It is a disinformation, confusion and uncertainty. There are a lot of unknowns, on how the prices will be introduced, how they will adapt, how they will be billed.”
The complicated tariff policies of American president Donald Trump have left the major industries that do business between Mexico and the United States, from agricultural cars, including textiles, rushing to comply with changing rules and questioning their future.
On March 26, Trump announced new 25% rates on cars and automotive parts made abroad that will come into force on April 3. The prices will force Salayandia to reduce its workforce, and it will begin to think about alternative location options for its factory – including a move to Texas, where it would invest in automation and robots in the manufacturing process to avoid the costs of Texas.
“The old politicians have seen a globalized world in which things have been made in countries at a lower cost … But now, with the arrival of Trump, which has an alternative economic vision of the world, manufacturers are starting to think about changing the way of producing things,” said Salayandia.
On March 4, when his trucks were stuck on the border, a price of 25% was to enter into force on the goods that the United States imported from Mexico. But as the Mexican business community was waiting with a breath to see if President Claudia Sheinbaum could negotiate his way out of order, Trump announced that the goods counted under the USMCA (the American-mexico-Canada, or the T-mec, because the commercial pact would be known in Spanish) would be exempt from prices until April 2.
The new rule was not a complete sigh of relief for business leaders in Mexico, who say that the atmosphere of uncertainty is underway, while they hurry to comply with T-Mec, and to worry about policies that descended the pipeline.
Mexican politicians quickly pointed out that the Mexican peso remained quite stable, between 20 and 21 pesos in the dollar.
The secretary of Mexico of the economy, Marcelo Ebrard, said that he would work with companies, in particular the Goliath automotive industry, to adapt 90% of exports to the directives of the T-Mec agreement. But it could take several months. Now, with the new rates focused on the car announced last week, all these efforts could have been in vain.
“What we are looking for is a preferential treatment for Mexico, in a way that we can protect jobs and economic activity in our country,” said Ebrard at a press conference on March 27. “We have already had six meetings with the [US] Trade secretary … There is no other country that has this level of communication with the United States. »»
Alternative markets
About 40% of the automotive parts used in vehicles sold in the United States were made through the border in Mexican cities whose savings are based on automotive factories. The Mexican automotive industry generates more than $ 100 billion in annual income and exports more than three million cars, mainly in the United States.
Alberto Bustamante, director of the National Agency for Suppliers of the Mexico Automobile Industry, said the prices affected the automotive industry in a variable manner, depending on a company exports entirely assembled parts or cars. This also involves more philosophical questions, as “what is a car?”.
“As a private sector, we have no options. If it depended on us, we would have already understood it, but it does not depend on us, it depends on the government,” said Bustamante. “In the United States, five million jobs are at stake if these prices come into force and Mexico, one million.”
He said that specialty and luxury vehicles with rare parts will be the most affected by current prices, as well as those made with steel or aluminum, because Trump also placed a 25% price on the goods made with these metals, which started on March 12.
Due to the difficulty and time which would take time to adapt to the directives of the T-Mec, the companies concerned must decide whether the payment of the tax of 25% is worth it, or if they should simply close shopping in Mexico and move their companies elsewhere.
Sheinbaum, instead of focusing on current turbulence, has viewed the reform of the T-Mec agreement to ensure the long-term stability of the Mexican economy. But it will not have this opportunity before 2026, the date on which the agreement will be exposed. If Trump implements the prices of the automotive industry on April 3, Mexico will respond with counter-tale.
In the meantime, Bustamante said that car manufacturers were starting to rethink their plans at 10 years and envisage the abandonment of Mexico’s abandonment as a manufacturing center, removing their eyes from the United States as the main market.
Cars are not the only products whose status is in purgatory. Other goods, peanut washing machines, including medical instruments, also have different degrees of compliance with the agreement on the T-mec trade.
Lawyers – an industry of almost $ 3 billion and the culinary pride of Mexico – do not always integrate into the T -MEC, according to the harvesting and sanitation processes used by specific companies. Mexico sends more than two billion pounds of lawyers to the United States each year, and prices could raise prices for popular fruits while Mexican lawyers are rushing to ensure that their orchards comply with T-Mec regulations.
“Our plan is to open new markets,” said Eleazar Oceguera, director of the association of producers and lawyers for lawyers in Jalisco. “If there is a problem, we want an alternative. We can no longer focus on a single market.”
Oceguera and Bustamante said the real cost would arrive at the American consumer, as thousands of products will become more expensive, prices for cars increasing by several thousand dollars per vehicle.
The atmosphere of uncertainty has been spread even to industries that adapt entirely in the directives of the T-MEC, because Trump plans to apply radical rates. Such a scenario would push the Mexican economy into a recession, while the American economy would face price increases.
“We will always defend Mexican companies, this is part of our fundamental work,” said Sheinbaum on March 27. “The essence of the T-Mec trade agreement is that there should not be any prices. It is essence.”
