Business · Trade · 2 hrs ago
Mexico seeks lower US tariffs and stronger auto chip capabilities
Mexico’s auto industry is seeking a lower US tariff on Mexican-made vehicles in the next round of trade talks.
They currently face a 25% base tariff in the US, compared with 15% for Japan and the European Union.
The industry is waiting for the fourth round of negotiations under the US-Mexico-Canada trade agreement, known as the T-MEC.
If Mexico secured a 15% base rate and a regional-content discount, its effective tariff could fall to 4% or 5%.
At the same time, experts say demand for automotive chips could rise about 259% by 2030 as vehicles use more electronics and processing power.
They say Mexico could focus on chip design, assembly, testing and packaging rather than making the most advanced chips.
Building those capabilities faces limits in electricity, water and supplies of specialized gases and chemicals, and experts call for coordination among government, businesses and universities.
Mexico’s automotive industry is seeking a substantial reduction in US tariffs as it awaits the fourth round of US-Mexico trade negotiations.
Mexican-made vehicles currently face a 25% base tariff entering the US, compared with 15% for vehicles from Japan and the European Union.
A 15% base tariff for Mexico, combined with a regional-content discount, could lower the effective tariff on Mexican exports to 4% to 5%.
The industry also wants Mexico to build capabilities in semiconductor design, assembly, testing and packaging to support rising demand for automotive chips.
A Texas Instruments executive estimated that demand for automotive chips would grow by about 259% by 2030.
- Who
- Mexico’s automotive industry, represented by the Mexican Automotive Industry Association (AMIA), and semiconductor specialist Texas Instruments.
- What
- The industry is seeking lower US tariffs and stronger Mexican capabilities in automotive semiconductors.
- When
- The industry is awaiting the fourth round of US-Mexico trade negotiations. Chip demand is projected to grow by about 259% by 2030.
- Where
- Mexico and the US, within the North American automotive industry.
- Why
- To reduce Mexico’s tariff disadvantage and prepare for increased demand for automotive chips as vehicles use more electronics and processing.
This story does not have two clearly opposing sides.
Mexican-made vehicles face a 25% base tariff entering the US, while Japan and the European Union face a 15% rate.
Mexico’s manufacturing sector is seeking a substantial reduction in tariffs under the US-Mexico trade agreement.
A Texas Instruments executive estimates automotive chip demand will have grown by about 259%.
- Current tariff on Mexican-made vehicles entering the US
- 25%
- Tariff rate for Japan and the European Union
- 15%
- Potential effective tariff on Mexican exports
- 4% to 5%
- Projected automotive chip demand growth by 2030
- About 259%
- Automotive semiconductors in a vehicle
- Around 2,400 elements
What people are saying
What we are hoping for in this fourth round is a substantial reduction in this tariff for us.
We need a strong USMCA for all its members.
I estimate that by 2030, we will have growth of approximately 259 percent in automotive chip demand.
Sources
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