Mexico Auto Parts Exports Slip on Tariff, Logistics Pressures

Mexico’s auto parts industry recorded a decline in production and exports in 2025, losing nearly US$2.7 billion compared with the previous year as uncertainty linked to US tariff policies weighed on the sector, according to data from the National Auto Parts Industry Association (INA). At the same time, industry leaders warn that geopolitical tensions in the Persian Gulf are raising logistics and energy costs, introducing new risks for global automotive supply chains.

Production in Mexico’s auto parts sector totaled US$119 billion in 2025, representing a 2.21% contraction from the record US$121.6 billion reported in 2024. The decline represents a loss of US$2.6 billion in production value year over year, reflecting the impact of trade uncertainty in North America following tariff measures promoted by US President Donald Trump.

“The year 2025 was full of challenges, full of doubt and uncertainty, but the information we have is positive if we consider how the auto parts sector recovered throughout the year,” said Julio Galván, Manager of Economic Studies, INA.

According to INA data, the sector experienced a difficult start to 2025. Between January and May, production registered an average year-over-year decline of 8.9% compared with the same period in 2024, reflecting a more uncertain economic and trade environment across the North American automotive market.

“From June onward we saw a recovery trend and, in fact, December confirmed this behavior. In that month, the value of auto parts production in Mexico reached US$8.9 billion, representing growth of 6.5% compared with December 2024,” said Galván Cruz.

The late-year rebound helped offset part of the losses recorded earlier in the year, suggesting improved stability in the regional automotive supply chain by the end of 2025. However, it was not enough to fully recover the production levels reached in 2024.

“In 2025 we reached a production value of US$119 billion, which represented a contraction of 2.2% compared with 2024, and if we observe how the year began we can see how the sector gradually recovered,” Galván Cruz said.

Despite the contraction, Mexico’s auto parts production remained concentrated in key segments of the global automotive supply chain. Electrical components continued to represent the largest share of the sector, reaching US$22.9 billion, equivalent to 19.3% of total national production.

Other major segments included transmissions and clutches, with US$11.6 billion, and textiles, carpets and seats, which together reached US$10.8 billion. Engine components, as well as suspension and steering systems, also ranked among the most important product categories.

Together, these five segments accounted for more than half of Mexico’s total auto parts production in 2025, underscoring the country’s specialization in several high-volume manufacturing categories within the global automotive supply chain.

The slowdown also affected external trade. Mexico’s auto parts exports totaled US$103.5 billion in 2025, representing a 6% decline from the US$106 billion reported in 2024. The drop amounted to US$2.5 billion in lost export value year over year.

“Apart from this decline, the trade balance remained positive, with the United States as the main destination, accounting for 87% of Mexican shipments, which confirms the high level of integration between both economies,” Galván Cruz said.

Mexico maintained its dominant position as the leading supplier of auto parts to the United States despite the decline in export value. According to INA data, the country accounted for an average 43.74% share of US auto parts imports during 2025, the highest participation recorded to date.

The trend continued through the end of the year. In December alone, Mexico represented 41.99% of total US imports of auto parts, reinforcing the country’s role as a central supplier within the North American automotive production network.

“Despite the drop in annual production and the impact of commercial uncertainty, the Mexican auto parts industry managed to preserve its position as an industrial partner of the United States in the manufacturing of automotive components,” Galván Cruz said.

He added that the negative performance of the US automotive market also influenced Mexico’s auto parts sector, given the close integration of production and trade flows across the region.

While the industry navigates the aftermath of trade-related uncertainty in North America, it is also monitoring new geopolitical risks that could affect production costs and logistics. The conflict in the Persian Gulf is already generating cost pressures related to shipping, energy and maritime insurance.

“The world is closely interconnected, so the war in the Persian Gulf will bring both impacts and opportunities for the auto parts sector. Every conflict creates impacts and opportunities, so we must remain attentive and informed, rather than waiting years to understand why certain substances or manufacturing lines can or cannot be used,” said Francisco González, Executive President of INA, in an interview with Forbes México.

Industry representatives have held discussions with international partners to assess potential supply chain disruptions stemming from the conflict.

“We have held meetings with Nordic and German countries, as well as with companies from Taiwan and Japan, to understand how they are navigating the war involving the United States and Israel against Iran,” González said.

The executive noted that the Persian Gulf region is a key global producer of oil and natural gas, making energy prices a critical factor for manufacturing sectors worldwide.

“The Persian Gulf produces oil and gas, and that is connected to suppliers that sell to Mexico, the United States and Canada. In that sense, we could see an impact through higher oil costs,” he said.

Rising security risks in the region are already affecting logistics costs, according to the industry association. Maritime insurance rates for cargo containers have surged in response to growing security concerns.

“There is a situation of increasing costs, starting with container insurance, which has risen from US$1,500 or US$3,000 to as much as US$30,000 per container,” González said.

The geopolitical escalation followed ballistic strikes launched on Feb. 28 by the United States and Israel against Iran, which resulted in the death of Ayatollah Ali Khamenei, Iran’s supreme leader since 1989, along with several senior officials. Iran responded with missile and drone attacks targeting US military bases across Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates.

Energy infrastructure has also been targeted. A drone attack on the Ras Tanura refinery in Saudi Arabia forced Saudi Aramco to suspend operations as a precaution, while QatarEnergy temporarily halted liquefied natural gas production after attacks on facilities in Ras Laffan.

The escalation intensified concerns about the Strait of Hormuz, one of the world’s most critical oil transit routes. Approximately 14 million barrels of oil pass through the strait each day, representing about 32% of global seaborne crude shipments.

González said the Mexican auto parts industry maintains limited trade with Persian Gulf countries, primarily involving specialized components shipped by air.

“It is not one of our main destinations, but certain auto parts and spare parts made in Mexico are shipped to Persian Gulf countries by air,” he said.