Mexico’s Auto Exports May Drop 12% in 2025 Despite Tariff Cuts

Mexico’s automotive exports are projected to decline by 12% in 2025 due to new US tariffs on vehicles, according to industry executives and data. While the US government reduced tariffs from 25% to 15% for vehicles meeting United States-Mexico-Canada Agreement (USMCA) origin requirements, the economic impact remains significant.

“One of the advantages we have is that cars made in Mexico with at least 40% US content will only pay 15%. However, we still expect a 12% drop in exports and a potential 4% reduction in national GDP,” said Fernando Gutiérrez, Director, Polykemi México, during the First Additives and Compounds Forum.

Despite the tariffs, demand for raw materials and compounds in the automotive sector remains steady, with moderate growth anticipated from Chinese and European automakers. “Chinese cars are entering Mexico, and we will see more models and platforms from Chinese manufacturers. Some are planning to build assembly plants in the country,” Gutiérrez said.

“In the face of tariff uncertainty, automakers in Mexico are being pushed to shift production to US facilities. However, many are maintaining investments in Mexico and choosing to absorb the tariffs to continue exporting,” Gutiérrez added.

The Mexican Automotive Industry Association (AMIA) reported that the automotive sector accounted for 26% of all foreign direct investment (FDI) in Mexico in 2024. Of this, 19% went toward car and truck assembly, while 7% supported the auto parts industry.

Partly due to tariffs, Mexico's light vehicle production fell by 2% year-over-year in May 2025, totaling 358,209 units, according to the National Institute of Statistics and Geography (INEGI).  Exports dropped 2.9% to 301,112 units in May, amid escalating trade tensions following US tariff measures. Total production for the January–May period declined by 0.5% compared to the same period in 2024.

Export volumes for the automotive sector, which accounts for nearly 4% of Mexico’s GDP, have decreased by 6.3% in 2025, totaling 1,334,667 units. Of these, 80.9%—or 1,079,690 vehicles—were exported to the United States. “The United States remains the primary destination for light vehicle exports,” INEGI noted. This marks a reversal from the more than 5% growth recorded in 2024, which had been the third consecutive year of post-pandemic recovery.

In addition, President Donald Trump announced a tariff increase on Mexican steel and aluminum imports from 25% to 50% under Section 232 of U.S. trade law. Mexico’s National Auto Parts Industry Association (INA) warned that the move could further disrupt the North American automotive supply chain. INA President Francisco González stated that the measure would increase production costs, affect delivery timelines, and undermine operational continuity under just-in-time manufacturing models.