U.S. President Donald Trump’s recent announcement of potential 25% tariffs on imports from Canada and Mexico, effective February 1, has led to a dip in shares of several Asian automakers and battery manufacturers, signaling concerns over the impact of such tariffs on businesses reliant on cross-border trade.
Here’s a breakdown of key companies and sectors that could face significant consequences:
Automakers
- Audi: Audi’s plant in San Jose Chiapa, Mexico, which produces the Q5, employs over 5,000 people. Nearly 40,000 cars were exported to the U.S. in the first half of 2024 alone.
- BMW: BMW’s San Luis Potosi plant manufactures the 3 Series, 2 Series Coupe, and M2, with most production directed towards the U.S. market. The plant will begin producing the electric “Neue Klasse” line from 2027.
- BYD: The Chinese electric vehicle (EV) maker has been scouting for sites in Mexico but stated that the factory will cater to the domestic market and not produce vehicles for U.S. exports.
- Honda Motor: Producing 80% of its vehicles in Mexico for the U.S., Honda faces challenges if the tariffs become permanent. Its Chief Operating Officer, Shinji Aoyama, emphasized that the company would need to rethink its production strategies in response.
- JAC Motors: Through a joint venture with Giant Motors in Mexico, JAC Motors assembles vehicles for the Mexican market, although it is exploring plans for further expansion.
- Kia Corp: Kia’s Mexican factory produces vehicles for U.S. exports, including some Tucson SUVs for Hyundai.
- Mazda: Mazda exports around 120,000 vehicles from Mexico annually to the U.S. The company has expressed concern over the potential tariffs but intends to review their implications before taking action.
- Nissan Motor: Nissan operates two plants in Mexico that produce models like the Sentra, Versa, and Kicks, for the U.S. market. The company produced nearly 505,000 vehicles in the first three quarters of 2024.
- Stellantis: Stellantis, which operates plants in both Mexico and Canada, produces a variety of models, including Ram trucks and Jeep vehicles. Tariffs could disrupt production at these facilities.
- Toyota Motor: Toyota’s two Mexican plants produce the Tacoma truck, which represents a significant portion of the brand’s U.S. sales.
- Volkswagen: The Puebla factory, one of Volkswagen’s largest, produces around 350,000 cars annually, including the Jetta, Tiguan, and Taos, most of which are exported to the U.S.
Auto Suppliers
- Autoliv: The Swedish airbag and seatbelt manufacturer operates large facilities in Mexico, though it declined to comment on the potential impact on its U.S. exports.
- Michelin: With plants in both Mexico and Canada, Michelin could face increased costs on parts used in U.S. vehicle production.
- Yanfeng: This Chinese company produces automotive interiors in Mexico, supplying major automakers like General Motors and Toyota.
Other key auto parts suppliers, including Pirelli, Brembo, and Eurogroup Laminations (which provides key components for electric vehicles), may also feel the strain of new tariffs. Tesla, which has encouraged its suppliers to set up plants in Mexico, faces uncertainty in its plans for expanding production in the region.
Electronics
- Foxconn: Taiwan’s Foxconn is building a large AI server factory in Mexico with Nvidia. The facility, set to produce cutting-edge AI chips, is slated to begin production in 2025.
- Lenovo: The Chinese electronics giant manufactures servers for North America in Monterrey, Mexico, making it vulnerable to any disruptions in trade policies.
- LG Electronics: LG’s Mexican operations, which produce home appliances and EV components, are under review as the company assesses the impact of potential tariff changes.
- Samsung Electronics: Samsung’s Mexican plants, responsible for producing home appliances and TVs for the U.S. market, may face increased costs due to tariffs.
Food & Drink
- Campari: The Italian spirits maker Campari operates several production sites in Mexico, including facilities producing tequila for the U.S. market. The company imports 27% of its U.S. sales from Mexico and Canada.
Packaged Goods
- Procter & Gamble and Unilever: Both companies rely heavily on Mexico for manufacturing consumer goods, with P&G importing 10% of its shipments from Mexico and Unilever importing 2%. Increased tariffs could disrupt their supply chains.
Impact on Trade Relations
The imposition of tariffs would not only affect individual companies but could also strain broader trade relations between the U.S., Mexico, and Canada, which have long enjoyed interconnected economies, particularly in the automotive and manufacturing sectors. As the situation develops, businesses across industries will be watching closely, considering the potential for increased production costs, supply chain disruptions, and shifting market dynamics.
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