Mexico, China, and the Freight Transportation Sector's Future

In December 2025, the Mexican Congress approved a reform that increased tariffs on 1,463 tariff lines for products originating from countries without a trade agreement, with emphasis on China. The measure, effective Jan. 1, 2026, raised rates between 5% and 50% and directly impacts strategic sectors such as automotive, textiles, steel, appliances, and footwear. In the automotive sector, the adjustment is significant: 94 tariff lines apply to vehicles and 141 to auto parts, with duties of up to 50% for electric vehicles and 25% to 35% for key components. This alters costs, planning, and investment decisions across the entire value chain. The stated objective is to strengthen domestic industry, incentivize the development of local suppliers, and reduce dependence on imported inputs, especially in the face of competition from Chinese products perceived as “subsidized” or low-priced. However, the measure has sparked intense debate about its real impact on costs, competitiveness, inflation, and supply chains.

Risks and Warnings From the Sector

Various industry stakeholders have warned that while the tariffs aim to protect domestic production, they may produce adverse effects:

• Dependence on Asian components. Many electronic auto parts, battery modules and electrical systems come from China. Replacing these inputs is not trivial and requires time, investment and technology transfer.

• Increase in costs and prices. The tariff increase will be passed, at least partially, to the final price of vehicles and spare parts, affecting both consumers and export competitiveness.

• Risk of supply chain disruptions. The Mexican automotive industry is highly integrated with the United States and Canada. Any disruption in the flow of inputs could weaken Mexico’s position as an export hub.

• Impact on employment and local suppliers. The transformation of supply chains could affect medium and small supplier companies, which face greater challenges to integrate and absorb additional costs.

The imposition of high tariffs could have wide-ranging effects: higher production costs, reduced competitiveness, shortages or higher prices for spare parts, risks to employment and local suppliers, and an impact on the end consumer.

An Opportunity to Develop Local Suppliers?

Paradoxically, the new tariff regime could spur the development of local suppliers. The tariff increases will not have a significant impact on inflation because these goods have a low weight in the inflation basket. There is domestic productive capacity to substitute some imported parts. In addition, the reform empowers the Ministry of Economy to implement specific mechanisms that ensure the supply of inputs under competitive conditions.

The challenge, then, is to accelerate the maturation of the national supplier base, strengthen Tier 2 and Tier 3 suppliers, and facilitate technology transfer and training to meet global standards.

Mexico, Epicenter of Automotive Nearshoring

Nearshoring has turned Mexico into a strategic hub for automotive manufacturing, logistics and innovation. Factors such as geographic location, USMCA, industrial infrastructure, and skilled labor have attracted record investments in recent years.

According to the Ministry of Economy, more than 80 foreign investment announcements related to nearshoring were recorded in 2023 and 2024, totaling over US$36 billion, of which 50% corresponds to the automotive industry. Companies such as Tesla, BMW, Audi, Continental, ZF Group and Bosch have expanded operations in Mexico, driving demand for local suppliers and regional integration.

The country is consolidating as a logistics powerhouse, and land transportation will play a fundamental role in the coming years. Mexico’s proximity to the United States and the growing demand for logistics solutions have made the country a key market for freight transport.

The Challenge of Supplier Localization

USMCA has tightened regional content rules in the automotive industry, requiring Tier 1 suppliers to source a greater share of their inputs in North America. This change has driven the search for Tier 2 and Tier 3 suppliers, although challenges remain in their development: access to financing, certifications, technology and compliance with ESG (environmental, social and governance) standards.

Various stakeholders have implemented initiatives to boost local supplier participation; one relevant program is the Supplier Development Program (PDP). Promoted by the National Auto Parts Industry (INA), the Ministry of Economy and the IFC (World Bank), the PDP seeks to integrate Mexican small and medium-sized enterprises (SMEs) into global value chains through training, mentoring and access to financing.

The objective is to increase national content in global value chains by 15%, reduce dependence on external inputs, and consolidate Mexico as a hub for advanced manufacturing and electromobility.

China as a Technological and Innovation Partner

China has established itself as a global leader in automotive technology, electromobility, industrial digitalization, and smart manufacturing. Its expertise in electric vehicles, connectivity, energy efficiency, and digital solutions makes it a strategic partner for Mexico and Latin America.

Technology transfer between China and Mexico has materialized through advisory centers, industrial partnerships, and joint research and training projects. The technological exchange between China and Latin America is opening a new chapter for the regional automotive industry. Beyond trade, this is cooperation based on innovation, sustainability, and joint development that drives the region toward smarter, more responsible mobility.

Mexico as an Export Platform

Mexico is the seventh-largest vehicle producer in the world and the leader in Latin America, with an automotive industry that represents 3.8% of national GDP and 20.5% of manufacturing GDP. Eighty-three percent of Mexican automotive exports are destined for the United States, but diversification toward Latin America and other markets is a strategic priority.

ELAM-FAW is already planning its expansion into Latin America; we seek to position ourselves as a provider of freight transportation solutions for regional markets, adapting our portfolio to each country’s needs and complying with international quality and sustainability standards.

The Challenge of Efficiency and Innovation

Competition from Chinese products, characterized by low prices and advanced technology, forces Mexican companies to rethink their competitiveness strategies. Opening borders is not enough. It is necessary to invest in knowledge, infrastructure, and diversification to compete internationally.

The key lies in adopting an agile approach that combines sustainability, innovation and a deep connection to market realities. Companies that master differentiation, process optimization, and adaptability will thrive in the new environment.

The future of Mexico’s supply chain depends on our ability to adapt to market demands while contributing to the well‑being of the planet. To achieve this, those of us in the sector must find the right balance between economic development and a sustainable future.