Mexico’s Auto, Aerospace Sectors Hurt by Tariffs and Talent Gaps

Mexico’s automotive and aerospace industries are undergoing major adjustments due to new US tariffs and shifting trade conditions. Between January and September 2025, light vehicle exports fell 0.9%, according to INEGI, while aerospace sector growth slowed to 9%, below post-pandemic averages, according to FEMIA. Tariffs of 25% on vehicles and parts with non-US content and 50% on steel and aluminum are reshaping cost structures and forcing companies to rethink supply chains and production strategies.

In September, manufacturing activity in Mexico declined 1.3%, INEGI reports. “Last year, our exports exceeded US$617 billion, with nearly 90% coming from the manufacturing sector. Our industry represents 19.6% of GDP,” said Zelina Fernández, General Director, Index Nuevo León, at the Mexico Business Summit. 

Julio Galván, Economic Studies Manager at INA, notes that 87% of Mexico’s auto parts production is exported, with the same share going to the US, reflecting strong dependency on that market. He highlights infrastructure, security, and legal certainty as Mexico’s top priorities, warning that without progress in these areas, the country risks losing its nearshoring advantage. “We are reaching a point of either collapse or expansion in infrastructure,” he says.

Rising US tariffs and the upcoming USMCA review are pressuring manufacturers to strengthen regional supply chains and meet stricter content requirements. Mexico is responding by boosting local production and aligning regulations to secure tariff-free access and preserve its trade competitiveness.

Miguel Ogazón, Technical and Engineering Director, ANPACT, highlights Mexico’s potential in strengthening regional integration within North America’s heavy-vehicle industry. “Moving from 64% to 70% regional content by 2027 is a huge opportunity for Mexico; we need to expand supplier capacity and attract new investment,” says Ogazón.

This shift could boost competitiveness and local value creation. “We must move from manufacturing to “mind-facturing,” creating value through innovation, new materials, and smarter processes,” says Galván.

Research, development, and innovation are gaining importance. Projects such as the TT (Totalmente Tlaxcalteca) EV and startups like Zacua illustrate efforts to build local products and capabilities. In aerospace, initiatives such as Halcón 2 and Pegasus PE-210A exemplify domestic R&D aimed at reducing import reliance and strengthening local supply chains.

Talent development remains a critical challenge. Digitalization, automation, and the shift to EVs are increasing demand for specialized skills. A 2025 ManpowerGroup study found that 70% of Mexican employers struggle to fill key roles in engineering, IT, operations, and logistics.

Developing and retaining skilled talent is key to Mexico’s future, says Luis Manuel Azúa, President, FEMIA. “We must convince young people that manufacturing and transformation industries are their future,” he adds. 

However, talent development requires updated curricula. “Current curricula still train students for the vehicles of the past,” says Ogazón. He calls for collaboration to develop “micro-credentials, specialized diplomas, and even new degrees” in emerging technologies. 

“If we add educational gaps to the uncertainty created by tariffs and trade tensions, we are basically putting obstacles in our own path,” says Julio Galván, Economic Studies Manager, INA.

Despite these pressures, Mexico remains a competitive investment destination. The aerospace sector ranks fifth globally for foreign direct investment and twelfth for exports, according to government data, while automotive production surpassed 3 million units between January and September 2025, according to INEGI.