Mexico’s automotive industry faces recession risk after US tariff decision

The Mexican Automotive Industry Association has said that the US decision to impose import tariffs on cars threatens to severely impact Mexico’s automotive industry and could potentially push the country into a recession.

The automotive sector plays a crucial role in Mexico’s economy, contributing 43 billion euros to the national treasury, Caliber.Az reports via foreign media.

It directly employs 979,000 people and supports more than 3 million jobs indirectly. Between 2017 and 2022, the industry attracted over 150 billion euros in investments, making Mexico the seventh-largest car producer in the world.

In 2024, Mexico is expected to produce 3.9 million vehicles, with 2.7 million - approximately 70 per cent - destined for export to the US. Mexico is also home to more than 6,000 companies that manufacture auto parts, a major export item to the US. 

The US tariffs could lead to an economic downturn in Mexico this year. Higher tariffs on Mexican automotive goods would result in increased prices, reducing demand and potentially triggering a manufacturing crisis in the country. The ripple effects could reverberate across the economy, exacerbating the challenges faced by Mexico’s industrial sector.

By Naila Huseynova