ChinaAutoInfo

Trade protection, especially in the automotive sector, has become a political football in U.S. elections. On October 7, U.S. Republican presidential candidate Trump stated that if elected, he would impose a 200% tariff on cars imported from Mexico.

Previously, Trump had threatened a 100% tariff on imported cars to support domestic industries, but he doubled down during a rally in Wisconsin.

"Necessity demands, and we will impose a 200% tariff," Trump said. "We won't let it happen. We won't let these cars enter the U.S."

Recently, the U.S. increased tariffs on Chinese electric vehicles and their components, imposing a 100% tariff on Chinese-made electric cars.

This stance is influencing Chinese manufacturers looking to "indirectly enter" the U.S. market through Mexico. However, data suggests that U.S. manufacturers might be more affected. Public data shows that in 2023, Mexico exported about 3 million cars to the U.S., with Detroit's Big Three accounting for half of the exports.

A think tank at the U.S. Tax Policy Center stated that large new tariffs on cars from Mexico "could raise the cost of domestic/imported, used/new cars."

Chinese car manufacturers' rapid expansion in Mexico has raised U.S. concerns.

In 2021, Chinese car companies sold 30,000 vehicles in Mexico, with a market share of 3%. By 2023, they sold 130,000 vehicles, with the market share rising to 19.5%.

Established players like General Motors, Ford, Toyota, and Kia saw their market shares decrease in 2023. One reason is that during the COVID-19 pandemic, while the global automotive supply chain was disrupted, Chinese car and parts manufacturers in Mexico could still ensure smooth supply, leading to rapid growth.

For instance, SAIC's MG brand entered the Mexican market in 2020 and sold over 60,000 vehicles in 2023, accounting for 4.4% of the passenger car and light truck market share in Mexico; Chery Automobile, which entered Mexico in 2022, sold nearly 40,000 vehicles in one year, with a market share of 2.8%.

Data from Mexico's National Statistics Institute shows that by December 2023, 12 Chinese car companies and 39 Chinese car brands had entered the Mexican market.

The Financial Times reported, "A wave of Chinese investment is surging south of the U.S. border."

In 2024, BYD was reported to plan to invest $1 billion to build an electric vehicle factory in Mexico. In May, BYD's first pickup, the BYD SHARK, was launched in Mexico. Additionally, Chery, SAIC, and Dongfeng announced plans to build local factories. In February, SAIC announced that the L7, LS7 would enter markets like Mexico; in July, Dongfeng's representative office in Mexico officially opened.

Even new car manufacturers are targeting Mexico. In September 2024, NIO signed a cooperation agreement with BBVA Mexico, the Mexican Electric Vehicle Association (EMA), and several local dealers, planning to enter the Mexican market in the fourth quarter of this year.

Against this backdrop, Trump's statement to raise the tariff on cars imported from Mexico to 200% can be seen as a way to garner votes. Chinese car companies must consider whether investing heavily in Mexico is still a win-win move if the "back door" is blocked.