US Auto FDI in Mexico Hits 13-Year Low at US$245 Million in 2024

Foreign direct investment (FDI) from the United States into Mexico’s automotive sector fell to its lowest level since 2011 in 2024, totaling just US$245 million, according to a recent analysis by Banco Base. The report attributes the decline to renewed protectionist rhetoric and tariff threats from US President Donald Trump.

“Only US$245 million flowed from the United States into the automotive industry in 2024—the lowest figure since 2011. Even during the Great Recession years of 2008 and 2009, the sector received more FDI, totaling US$256 million and US$694 million, respectively,” the bank noted.

This sharp decline contrasts with the previous decade, when US investment in Mexico’s automotive sector reached a cumulative US$17.58 billion—an annual average of US$1.76 billion. Banco Base stated that the drop in 2024 may signal a turning point for Mexico, which between 2006 and 2024 attracted over US$91 billion in automotive FDI, accounting for 15.28% of total FDI inflows.

Banco Base attributes the decline in investment to rising costs of exporting vehicles from Mexico, driven by the imposition—or threat—of elevated tariffs. The analysis highlights that sector-specific duties, particularly on vehicles and components under Harmonized System (HS) Chapter 87, have eroded investor confidence.

“Chapter 87, which includes vehicles, tractors, and bicycles, faced an average tariff of 9.32%. Within this category, car bodies were taxed at 17.71%,” the report stated. For finished passenger vehicles (HS code 8703), the average tariff reached 16.07%, with 35.72% corresponding to US-origin content and the remaining 64.28% subject to the full 25% tariff.

“These elevated tariffs help explain the 3.24% decline in finished vehicle exports from Mexico during the first half of 2024,” Banco Base added.

Despite the decline in US-sourced automotive FDI, total global investment into Mexico’s automotive sector remained stable in 2024, with Japan accounting for approximately 88% of the total. However, the bank cautioned that future investments could weaken if the United States sustains or escalates trade restrictions.

Meanwhile, Banco Base foresees a possible reallocation of FDI toward other sectors—particularly electronics—as companies look to diversify and minimize tariff exposure. In its report Tariffs, Exports, and the Possibility of a New Nearshoring Opportunity for Mexico, the bank stated: “Tariffs and non-tariff barriers will ultimately shape which sectors experience production and export growth.”

The bank further noted: “It is still too early to draw definitive conclusions, but if IEEPA tariffs continue to be inconsistently applied while sector-specific tariffs remain elevated, production may begin to shift across industries.”

Emerging evidence of this trend is visible in US import data for the first five months of 2025. According to Banco Base, imports from Mexico of nuclear reactors, boilers, machinery, and mechanical appliances—including computers—have already surpassed those of automotive products.