Mexico’s Auto and Aerospace Sectors Navigate Tariffs, Talent Gaps

Mexico’s automotive and aerospace industries are undergoing significant 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 prompting companies to rethink supply chains and production strategies.

Jorge Mario Martínez Piva, interim director, CEPAL in Mexico, noted that the nearshoring window for Mexico is narrowing, shifting investment priorities toward domestic production. “This does not imply a decline in investment but the start of a new phase focused on strengthening national development,” he said, amid global geopolitical uncertainty. Still, he warned that Latin America risks remaining on the global periphery in advanced services, artificial intelligence, and Industry 4.0. INEGI reported a 1.3% decline in manufacturing activity in September 2025.

The Mexican government is promoting initiatives such as “Hecho en México” under Plan México to strengthen domestic production, reduce unnecessary imports, and leverage USMCA rules of origin for tariff-free access to the US market. Regulatory alignment and infrastructure development—including logistics hubs and industrial parks—are key to supporting high-value manufacturing.

R&D and innovation are increasingly important. Projects such as the TT (Totalmente Tlaxcalteca) electric vehicle and startups like Zacua demonstrate efforts to build local capabilities. In aerospace, Halcón 2 and Pegasus PE-210A exemplify domestic R&D aimed at reducing import reliance and strengthening supply chains.

Talent development remains a critical challenge. Digitalization, automation, and the shift to electric vehicles are driving demand for specialized skills. Industry clusters in Queretaro and Oaxaca are partnering with universities and technical institutes to train workers for emerging needs. Yet a 2025 ManpowerGroup study found that 70% of Mexican employers struggle to fill key roles in engineering, IT, operations, and logistics.

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