JAC Skirts Mexico’s 50% Import Tariff, Attracting Asian Rivals

JAC is positioned to avoid Mexico’s proposed 50% tariff on vehicles, parts, and motorcycles imported from countries without a free trade agreement—making it the only Chinese automaker in the market able to do so thanks to its recognized assembly operations in Hidalgo. The company’s SKD assembly model, active since 2017, has also drawn interest from eight Asian manufacturers seeking ways to bypass the policy, according to JAC Mexico executives.

The Economy Ministry is preparing a stricter trade framework aimed at increasing local integration and reducing dependence on pre-assembled platforms from China, a change that would affect most Asian brands operating in Mexico. JAC stands out because its assembly operations are certified under programs such as IMMEX, Prosec, and the Octava de Comercio, which allow tariff exemptions in exchange for job creation and production activity in the country.

JAC began operations in Mexico with a small volume, assembling just over 1,000 units in 2017. Its installed capacity now reaches roughly 60,000 units per year. The company announced a MX$3 billion (US$166.7 million) investment in June to expand its Ciudad Sahagún complex. The plan includes doubling production lines from four to eight and adding a 15-hectare logistics yard, bringing the facility to 300,000 square meters.

Although the company imports most major components from China under the SKD model, it sources between 25% and 30% of its parts in Mexico. JAC Mexico CEO Isidoro Massri said the company works with “close to 300 Mexican suppliers, between national and local,” adding that the supply base covers “after-sales, localization of spare parts, consumables, services, and fluids.”

Massri said eight automakers have approached JAC about using the Hidalgo plant as a shared assembly site but emphasized that the company is not considering contract manufacturing. “We are JAC and we are not going to share something that we have worked on for years just because now it is more expensive,” he said. “The plant is the element that demonstrates investment, adaptation, and localization of components. Manufacturing for third parties is not our objective.”

The company remains focused on serving the domestic market—a strategy Massri described as “assembling from Mexico, for and by Mexico.” JAC sees export potential as capacity grows and could reach 100,000 units if demand requires it, but Massri said it is not a near-term priority. During a recent Latin American summit, representatives from 20 countries expressed interest in importing Mexican-assembled JAC vehicles due to tariff advantages. Exporting, he added, would require a shift in the plant’s operating model. “The focus of the plant is what the customer needs in November in Merida, in Tijuana, in Guadalajara, in Mexico City,” he said.

 Mexican automakers now expect the proposed tariff on imports from countries without a trade agreement to move forward, with approval anticipated in early December. The plan would impose duties of up to 50% on vehicles from China, India, Thailand, and Indonesia. While the Economy Ministry frames the measure as a way to protect domestic production, many in the sector view it as a delayed response to the rapid arrival of low-cost Asian models.

The Mexican Automotive Industry Association (AMIA) said the 50% tariff on brands selling Chinese-made vehicles is positive because it encourages investment in the country. The organization, which represents established automakers including General Motors, Nissan, Toyota, Kia, Volkswagen and JAC, stated that it supports tariff measures aimed at maintaining what it described as a fair national market.

Gerardo Gómez, general director, J.D. Power Mexico, told El Financiero  that applying tariffs of up to 50% on vehicles imported from China would not only raise prices but could push at least half of the Chinese brands operating in the country out of the market. He explained that Mexico has just over 30 Chinese automotive brands, some of which do not report sales, and all of them would face significant pressure if the tariff is implemented.