[By Guancha Net Columnist Han Xiaopeng]
Starting from April 2nd, the US will impose a 25% tariff on imported cars and key components, covering core parts such as engines, transmissions, and electronic components.
As the largest auto supplier to the US, Mexico will be hit first by the tariff. Data shows that in 2024, Mexico exported 2.8 million vehicles to the US, accounting for 69.5% of its total production and nearly 20% of US auto imports. More notably, the amount of auto parts exported from Mexico to the US reached $40.89 billion, accounting for 40% of the US market share for similar products. General Motors, Nissan, and other multinational carmakers' assembly plants in Mexico supply 80% of their output directly to the US market.
Once the new tariff is implemented, the production cost of crossover vehicles will increase by $4,000 per unit, while the cost of electric vehicles produced in the US may rise by up to $12,000 per unit.
Although the Mexican government has made every effort to mediate and attempted to negotiate exemptions, Trump's true goal goes far beyond short-term economic interests. From demanding cooperation on immigration control to pressuring against criminal organizations, from coercing industrial relocation to undermining China-Mexico economic cooperation, the US is using tariffs as leverage to drag Mexico into an "economic dependency" trap step by step.
From "North American Manufacturing" to "American Manufacturing," the US is unilaterally rewriting trade rules.
The North American free trade system is experiencing unprecedented changes. The core clauses of the US-Mexico-Canada Agreement (USMCA), originally aimed at promoting regional integration, have been openly tampered with by the Trump administration. The automotive industry origin rules stipulated in the agreement - that 62.5%-75% of parts must be produced in North America to qualify for duty-free treatment - have been covertly replaced with "Made in America" in practice.
This restructuring of rules brings three waves of impact:
First, the value of Mexico's domestic supply chain is systematically weakened. Even if Mexican enterprises invest heavily to improve their localization rate, as long as the parts are not "Made in America," they will still face a 25% tariff when entering the US market.
Second, US component suppliers gain monopolistic advantages. Automakers are forced to prioritize purchasing American products to avoid skyrocketing costs, making Mexican factories increasingly沦为 low-end assembly workshops.
Third, the dream of North American regional economic integration spanning generations faces the danger of becoming a mere formality. The USMCA has degenerated from a tripartite win-win trade framework into a tool for the US to unilaterally extract benefits.
Ironically, Mexico's economy minister admitted that 90% of Mexico's auto exports to the US already meet the 75% North American production requirement stipulated in the USMCA. However, under the new regulations, only the "Made in America" portion enjoys tax exemption, while the locally manufactured part becomes the object of taxation.
US major trading partners 2018-2024 (Unit: billion USD) "Mexico Plan"
Mexico's automotive industry is mired in an "dependency trap."
Trump's tariff policy is far more than simple trade protection; it is a "precise surgery" targeting Mexico's automotive supply chain, with impacts penetrating into the capillaries of the industrial structure.
At the supply chain level, the US is using tariffs as shackles to force Mexico into accepting an "economic vassal" role. General Motors, Ford, and other automakers are compelled to cut procurement of Mexican components and shift high-value-added segments back to the US.
Taking Nemak, a leading Mexican auto parts giant, as an example, its aluminum alloy cylinder heads account for over 40% of global market share. However, under the new tariff policy, US customers have demanded that Nemak establish a production line in the US. Mexico's painstakingly cultivated domestic supply chain is being fragmented by the tariff sword.
At the industrial policy level, Mexico's "domestication" ambitions have suffered setbacks. Former President López's "Mexico Plan," which aimed to build an autonomous industrial chain, has been undermined by new regulations that equate "local manufacturing" with "being taxed." If a Mexican factory uses domestically produced batteries or motors, it will actually increase the overall tariff cost of the vehicle.
Under this distorted incentive mechanism, not only does Mexico's automotive industry become increasingly reliant on the US market for exports, but also its industrial chain and supply chain are forced to rely more on US products. The Mexican automotive industry risks being trapped at the bottom of the industrial chain, becoming a sweatshop for American multinational capital.
In terms of foreign investment layout, Mexico's geographical advantage is fading. Companies like CATL and BYD once viewed Mexico as a stepping stone to enter the North American market, but the new tariff policy significantly weakens this strategic value. Analysis of foreign direct investment inflows into Mexico reveals that although FDI amounts continued to rise during 2023 and 2024, growth rates began to decline, dropping from 18.8% and 8.3% in 2021 and 2022 respectively to 0.4% and 1.1%.
More importantly, the proportion of new projects in total FDI amounts has decreased year by year. In 2024, new projects accounted for only 8.6% of Mexico's absorbed FDI, while 77.9% were profit reinvestments from existing enterprises. This "maintenance of stock, shrinkage of increment" trend reflects international capital's long-term doubts about Mexico's investment environment under the continuous threat of Trump's "tariff axe."
Mexico's somewhat pale struggle
In response to Trump's recent series of tariff threats, Mexico's reaction has been a somewhat pale struggle. President Sheinbaum has repeatedly stated that developing bilateral economic relations with the US is crucial, as it concerns Mexico's core economic interests, but sovereignty should not become a bargaining chip. US-Mexico trade should be based on equality and mutual respect. She often repeats the phrase, "Cooperation and coordination yes, subordination no" (colaboración y coordinación sí, subordinación no).
In reality, Mexico has shown restraint and cooperation in the face of each tariff threat from the Trump administration, sending government delegations to negotiate in the US multiple times, and President Sheinbaum has tried to communicate with Trump through summit talks to seek tariff exemptions. Although temporary exemptions were obtained in early March by transferring criminal organization leaders and cooperating in anti-drug operations, Trump's tariff cudgel will still strike Mexico. Trump's ultimate goal remains clear: either accept the restructured industrial chain dominated by "Made in America," or face the risk of economic suffocation.
On March 28th, Sheinbaum expressed opposition to the US imposing a 25% auto tariff unilaterally. Mexico is the country most integrated with the US in the automotive industry. Last year, approximately 2.5 million vehicles were exported from Mexico to the US. She emphasized that Mexico will wait until Trump announces new tariff measures on April 2nd before making a "comprehensive and strong response." However, due to Mexico's high dependence on the US economy, such a "response" is unlikely to be truly powerful.
Mexico President Sheinbaum (Photo by Guancha)
Mexico may be forced to take sides between China and the US
Trump's tariff cudgel ostensibly targets the globe but is actually aimed at China. Behind this trade博弈lies a silent battle over dominance of the global economic order.
For Chinese companies, Mexico's plight serves as a wake-up call. Chinese enterprises investing in Mexico and utilizing various competitive advantages provided by the local market to enter the US market have seen increasing momentum since the pandemic. This has not only drawn attention from local governments and businesses but also made the US uncomfortable, prompting them to urge the Mexican government to take measures to review these investments to avoid so-called "unfair competition" brought by Chinese products. Companies like CATL and BYD, which have established themselves in Mexico, may face the risk of "double taxation" if their products contain Chinese components.
More critically, the US is pressuring Mexico to review Chinese investments, demanding that it "draw a clear line" between China and the US. When the USMCA is reviewed again in 2026, the US may attempt to further suppress Chinese-made parts or even products with Chinese elements through measures such as forced additional taxes. Recent signals released by the Mexican government are intriguing: first, announcing a reassessment of Chinese textile tariffs, then considering initiating "binding tariffs" on Chinese goods within the WTO framework. These developments suggest that Mexico may be forced to become the US's "economic decoupling" outpost.
The tariff barriers built by the Trump administration reflect the belief of Trump and his supporters: post-war liberal economic order is not the foundation of American prosperity but its destruction. In their view, the US relinquished its economic sovereignty after WWII by lowering tariffs and allowing unrestricted capital outflows. The essence of this tariff storm is the fissure in the global governance system, marking the end of Globalization 2.0.
As of March 15th this year, China has become Mexico's fourth largest source of foreign direct investment. Graph by South China Morning Post
China's path to breaking through and civilization choices in the tide of globalization
China's way to break through lies in solving the "tariff fortress" with a higher level of openness. On one hand, it needs to work together with many countries to jointly build the "Belt and Road Initiative" at a high quality level and accelerate cooperation under the Regional Comprehensive Economic Partnership (RCEP), constructing an independently controllable supply chain. On the other hand, it should strengthen its discourse power over emerging technology standards, establishing "asymmetric advantages" in areas such as intelligent connected vehicles and solid-state batteries. Mexico's struggle under Trump's "tariff axe" warns us: the single-market dependency model has become a fatal weakness in the era of de-globalization. Only by building diversified and resilient global value chains can we resist the "rule sniper" of hegemonic countries.
Trump's tariff policy is far from an isolated event; it is a concentrated outbreak of the cyclical crisis of the capitalist system. When the US is no longer satisfied with sharing the dividends of globalization and instead seeks to reconstruct the economic order with strong measures, developing countries face not only the pain of industrial transformation but also the choice of civilizational paths.
Mexico's predicament reveals a cruel reality: under a hegemonic-dominated system, the industrialization process of late-developing countries always faces a "ceiling," either accepting exploitative division of labor under hegemony or advancing painfully amidst blockades. China's rise provides a third possibility for the world, especially for the Global South—building a community with a shared future for mankind to achieve win-win and shared development.
This tariff war brought by Trump will surely be remembered by history. It is not just a contest of trade rules but a great test of whether humanity can transcend the logic of hegemony and achieve common development.
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