Mexico Aims to Raise Auto Tariff Exemptions, Official Says

(Bloomberg) -- Mexico wants a greater proportion of each auto built in the country to qualify for US origin status, a move that would lower the impact of President Donald Trump’s tariff policies, Deputy Economy Minister for Foreign Trade Luis Rosendo Gutierrez said. 

Confronting 25% tariffs on a wide range of products, Latin America’s second-largest economy is moving quickly to protect its vehicle shipments to the US, one of its most important exports under the regional free trade agreement that includes the US and Canada. 

“When it comes to autos, we’re looking for some aspects within the production process to be considered to increase the American content and increase the deduction” under the existing tariff regime, Gutierrez said Thursday at Bloomberg Insights and Innovation Summit in Mexico City.

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Gutierrez predicted that the US-Mexico-Canada free trade agreement Trump signed in his first term would be strengthened but said Mexico wants to have a more effective dispute-resolution process established. He had previously said that the 2026 review process for the deal — known as the USMCA — may be sped up under Trump.

“We’re going to continue seeing tariffs in the coming years, and we will have to accustom ourselves to a model where the most important thing is not having a 0% tariff, but having the lowest tariff in the market, or in comparison to other countries. That’s what our country is managing to do each day,” he said.

Mexican policymakers have said they will continue conversations with US officials on levies on steel, aluminum and autos ahead of a May 3 deadline set out by the Trump administration in which tariffs on auto parts are set to take effect. 

Among topics that could see progress in that timeframe are the tariffs on those three key products, as well as China-North America relations, and the upcoming USMCA review, added Judith Garza Rangel, who coordinates a business advisory group known as “cuarto de junto” that is preparing a set of technical recommendations for the Economy Ministry ahead of USMCA talks. 

Companies across impacted sectors are assessing the tariffs, and among them steelmaker Ternium, where Garza Rangel also holds the post of senior institutional director, is “managing costs, looking to be more efficient, and preparing with trainings to better understand what’s happening and adapt to it,” she said at the event.  

The ongoing conversations on tariffs could lead to a wider review of the trade deal among North American countries ahead of schedule, added Rogelio Garza Garza, executive president at auto association AMIA and a former deputy economy minister for industry. 

“We’re imminently entering the review space, we’re being pushed toward that,” Garza Garza said. “I believe it would be positive to accelerate these processes to end the uncertainty and reach agreements. And we need to continue to fight for the USMCA.”

Garza Garza said he’s confident Mexico will reach a deal with the US on the auto sector, noting that the US proposal for auto parts “isn’t viable in the long term.”

(Updates with additional details from the event)

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