Trump Tariff Impact, Mexico Remains Calm

Despite the constant threat of tariffs from the U.S., Mexico's automotive sector seems to have been unaffected. Mexico benefits from the U.S.-Mexico-Canada Free Trade Agreement, which remains intact.

In Puebla, the automotive city of Mexico, people are both relaxed and concerned about the "tariff day": what news will come from the U.S.? When the news arrived, people here breathed a sigh of relief. Mexico was not included in Trump's "reciprocal tariff." It seems that the measures taken by the White House for this city and this country are better than expected. Puebla has become an important automotive production base after arduous efforts.

Significant Growth in Auto Parts

"During Trump's first term, negotiations for the North American Free Trade Agreement were conducted for the first time in many years. The result is that especially the automotive industry has benefited," said 71-year-old business consultant Carisse from Puebla. A few years ago, he served as the deputy director of "corporate relations" for Volkswagen in Puebla. There is one of the largest Volkswagen factories outside Germany, producing for the North American market.

Carisse told Deutsche Welle (DW) that during this process, Mexico experienced a significant increase in parts supply. The local manufacturing ratio increased from 20.5% to 75%. At the same time, the demand for auto parts in the U.S. also rose. "From this, it can be concluded that the new negotiations have brought success to both the U.S. and Mexico."

Mexico’s Economy Minister: Retaining the Free Trade Agreement is Extremely Valuable

Mexico's Economy Minister Ebrard said, "The free trade agreement still stands, which is extremely valuable for Mexico. We have not imposed any reciprocal tariffs. A large part of our foreign trade through the United States-Mexico-Canada Agreement is duty-free. This is very good news."

Former Volkswagen manager Carisse said that it can be imagined that, with the experience of the first new negotiation of the free trade agreement, Mexico and the U.S. may now conduct a second negotiation to further strengthen the goal of local manufacturing.

Business advisor Smith, who participated in the first new negotiation of the free trade agreement, said, "So far, Mexico's moderate approach has worked well. We know that the U.S. wants to renegotiate the agreement."

Preliminary Impact Varies

The preliminary impact of U.S. tariff policies varies. Mexican media reported that after Trump announced the imposition of tariffs on imported cars, automaker Stellantis decided to suspend production at two of its Mexican factories. Nissan reportedly suspended production at two commercial vehicle factories.

And there is good news from Sweden. Mexico’s Emergency Minister Ebrard announced that Volvo plans to increase investment in its Mexican factory to $700 million.

Source: DW

Original source: https://www.toutiao.com/article/1829278933701643/

Disclaimer: The article represents the views of the author only.