Mexico Auto Exports to US Drop as New Plants Face USMCA

Mexico’s automotive sector is facing a decline in exports to the United States as new assembly plants struggle to comply with rules of origin under the USMCA. Since April 3, vehicles that fail to meet these requirements have been subject to a 25% tariff upon entry into the United States, up sharply from the previous 2.5% rate.

According to the National Institute of Statistics and Geography (INEGI). companies operating newer plants—those established within the last decade—have reported significant drops in exports. Mazda, which opened its sole Mexican factory in 2014, saw shipments fall 36% year-on-year from April to July, totaling 29,375 units. BMW Group’s San Luis Potosi facility, operational since 2019, recorded an 18.2% decrease to 29,678 vehicles. Audi’s San Jose Chiapa plant, in operation since 2016, exported 55,189 units, down 22.4% in the same period. Mercedes-Benz’s Aguascalientes plant and Honda’s Celaya plant reported declines of 15.4% and 8.7%, reaching 20,166 and 70,400 units, respectively.

By contrast, older plants are better positioned to comply with USMCA content requirements due to well-developed regional supply chains. Ford, which has operated in Mexico for nearly a century, benefits from extensive local sourcing.

USMCA rules mandate higher regional content in vehicles. The Regional Value Content (RVC) requirement rose from 62.5% to 75%, while the Labor Value Content (LVC) stipulates that 40% of a vehicle’s value must come from facilities where workers earn at least US$16 per hour. Automakers can receive credits of up to 10% for R&D and IT activities and an additional 5% for producing engines, transmissions, or batteries. Furthermore, 70% of steel and aluminum must originate from North America, and key components—including engines, chassis, transmissions, axles, suspensions, steering systems, and batteries—must meet the average RVC threshold.

Border customs data indicates a broader slowdown in trade flows tied to uncertainty over U.S. tariffs. “There has been a slight decline in border movements. It is not a collapse, but a preventive adjustment by industries anticipating potential tax applications,” said Jesús Velázquez, Customs Director at Palos Garza in Nuevo Laredo, in an interview with El Sol de México. He added that previous tariff deadlines were postponed in January and April, but repeated extensions continue to pressure strategic sectors, especially automotive.

Despite these challenges, other industries remain resilient. Non-automotive manufacturing and electronics exports have continued to grow, partially offsetting declines in vehicle and steel shipments. Barclays reported that Mexico remains the largest supplier of duty-free goods to the United States, with US$37.6 billion of June’s US$44.9 billion in exports entering without tariffs. Mexico’s effective tariff rate currently stands at 4%, far below China’s 40%, with only US$1.8 billion of exports subject to duties.

Barclays analysts warned, however, that the removal of current exemptions could raise Mexico’s effective tariff rate to 8.4%. Meanwhile, the USMCA itself is under review and must be renewed before July 1, 2026, adding further uncertainty for exporters.