Navigating Tariffs and Automotive Supply Chain Shifts

We begin the year carrying forward the uncertainty inherited from 2025, triggered by the imposition of tariffs and the threat of new foreign trade challenges. July 2026 is already marked on the calendar as the date for the review of the United States–Mexico–Canada Agreement (USMCA). As early as October, consultations began in each of the three countries, and the respective ministries and departments of economy have been working in detail on what they intend to review and, if necessary, renegotiate.

Since March 2025, we have faced the tariff measures imposed by the administration of Donald Trump. Some of these threats were implemented and later adjusted, but they undoubtedly left a mark, especially on products that did not comply with the rules of origin. In the automotive industry, vehicles that failed to meet regional content requirements could previously be exported under a 2.5% tariff. However, that tariff was increased to 25%, plus the additional 2.5%, when the regional content requirement was not satisfied. Later, the measure was modified: the tariff was eliminated for the portion of the vehicle that complied with the rule of origin, while the tariff remained in place for the non-regionalized portion.

Companies that had relied on the Most Favored Nation (MFN) tariff rate of 2.5% will no longer be able to benefit from that privilege. Today, they are under urgent pressure to localize the content of their vehicles and auto parts. This shift is already evident in strategies aimed at reducing sourcing from other markets, particularly China. If this trend continues, we expect the USMCA review to present a significant opportunity for suppliers established in Mexico to integrate into the value chains of OEMs and Tier 1 companies across North America.

Alongside tariff uncertainty, another phenomenon is unfolding: a slowdown in the adoption of electromobility in the United States, our primary export market. The expansion of electric vehicle (EV) adoption had been strongly promoted during President Joe Biden’s administration, which supported this technology as a means of reducing emissions. Sales of electric vehicles grew thanks to tax incentives that could represent savings of up to US$7,500, applied directly at the point of purchase.

Tesla sold 670,000 electric vehicles in the United States in 2023. However, sales declined to 580,000 units in 2025. Total electric vehicle sales in the United States in 2025 reached 1.27 million units, with Tesla accounting for roughly half of that volume, followed by General Motors with a 13% share. Overall, nearly 10% fewer electric vehicles were sold in the United States in 2025 compared to the previous year.

This slowdown stands in contrast to the continued growth of electric vehicle sales in Europe and China, where 25% and 60% of total vehicle sales, respectively, now consist of electric and plug-in hybrid models. While incentives remain in place, these regions also benefit from a broader range of vehicle offerings and increasingly accessible price points.

For Mexico, as a major supplier of vehicles to the United States, this presents a dilemma. We will likely continue producing gasoline-powered vehicles, while the production of vehicles incorporating new technologies is slowing domestically. If this trend persists, it is reasonable to expect that within three years — when a new US administration may bring changes in environmental policy — Mexico could find itself technologically lagging behind other global regions.

There are already signs that many companies established in Mexico have deprioritized research and development efforts related to emerging technologies, choosing instead to focus on products that currently generate profits: internal combustion engine vehicles. While this strategy may yield short-term financial stability, it risks compromising long-term competitiveness in a rapidly evolving global market.

Therefore, 2026 is likely to be a year marked by production levels similar to those of the past two years, reduced investment as companies await clarity on the future rules of the USMCA, and a continued emphasis on traditional vehicles. However, there is also a positive dimension to this outlook. Tier 2 companies located in Mexico will encounter new opportunities to integrate into the supply chains of multinational corporations seeking to strengthen regional content and reduce exposure to tariff risks.

Another key question that will shape the region’s future is the role China will ultimately play in North America. Will Chinese automakers be able to produce vehicles in Mexico? Will Chinese auto parts manufacturers establish operations in our country? Will Chinese OEMs and Tier 1 companies incorporate Mexican suppliers into their supply networks? The answers to these questions will significantly influence the configuration of the regional automotive industry in the years ahead.

Amid these shifting dynamics, the Nuevo León Automotive Cluster (CLAUT) will continue fulfilling its mission of linking companies across different segments of the value chain. This year, the Automotive Supplier Event celebrates its 16th anniversary of bringing the industry together. We anticipate the attendance of approximately 3,000 executives from across the automotive sector and expect numerous business meetings to materialize — meetings that will later translate into purchase orders and tangible opportunities for Mexican entrepreneurs.

We are also expecting the arrival of companies from Canada, the United States, Argentina, Spain, Germany, and the United Kingdom. These firms are exploring opportunities to establish operations in Mexico in order to leverage the advantages offered by the USMCA and the ongoing nearshoring trend. Mexico continues to position itself as a strategic platform for manufacturing and exports within North America.

Despite the adverse circumstances — tariff pressures, geopolitical tensions, shifting environmental policies, and evolving technological paradigms — we remain convinced that this year continues to represent a “good moment for Mexico.” The country’s industrial capabilities, geographic advantages, skilled workforce, and established manufacturing ecosystem provide a strong foundation to navigate uncertainty and seize emerging opportunities.

The road ahead will require strategic adaptation, greater regional integration, and a renewed commitment to innovation. Companies that succeed will be those capable of balancing short-term operational realities with long-term technological transformation. Mexico’s challenge is not only to respond to external pressures, but to proactively shape its role within the North American automotive ecosystem.

In navigating between tariffs and technological change, resilience and collaboration will be essential. The coming months will define not only the framework of trade relations in North America, but also the trajectory of our industry for years to come.