Canadian, Mexican Auto Sectors View Trump Victory With Unease

OTTAWA – The Canadian and Mexican auto sectors are assessing a second Donald Trump presidency in the U.S., given his threat to impose universal tariffs on all imports and to review the US-Mexico-Canada Agreement (USMCA). 

Trump has floated imposing 10%-20% tariffs on U.S. imports even from countries having free-trade agreements with America. And for Mexico auto exports, the president-elect has threatened to impose eye-watering 200% duties. 

His formal election program said: “Republicans will support baseline tariffs on foreign-made goods, pass the Trump Reciprocal Trade Act, and respond to unfair trading practices.” https://rncplatform.donaldjtrump.com/?_gl=1*1xds52n*_gcl_au*MTQ5NTY5MjM3OC4xNzMwOTMyODQ1&_ga=2.44141988.1615323722.1730932846-427515693.1730932846 

As for the USMCA review, Trump told the Detroit Economic Club on Oct. 11 he would notify Canada and Mexico this will happen in 2026, as per the agreement’s Article 34.7, which authorizes a potential “joint review,” discussing any party’s recommendations and deciding any appropriate actions. Any party can quit the deal with six months’ notice. https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/34_Final_Provisions.pdf Regarding the review, Trump said: “It’s coming due very soon. Oh, I’m going to have a lot of fun.” 

Canadian and Mexican automakers and their suppliers are less enthused. 

Brian Kingston, president and CEO, Canadian Vehicle Manufacturers’ Assn. (CVMA), says: “Any tariff action that impacts Canada would have a huge negative economic impact” on the auto sector. “We’re so dependent on the relationship with the USA despite efforts to diversify. Our economy is intertwined with the USA.” 

Kingston, however, sees the Trump 2.0 trade policy as “an opportunity to find a path forward that avoids tariffs and brings further integration” between Canada and the U.S. “The focus of the Trump Admin. is decoupling from the Chinese economy. There’s an opportunity to do that that includes Canada. The USA can’t move away from the electric-vehicle supply chain without Canada being a key partner. We need to double down on alignment with the USA making sure our rules and regulations are completely aligned with the Americans,” he tells Wards Auto.  

As for the USMCA review, while Kingston expects the U.S. to push for certain changes, he is optimistic, given Trump negotiated the deal during his first term in office in 2018: “It has his fingerprints all over it.

“The USMCA has been widely celebrated,” followed by “massive investments in the automotive industry in the USA and Canada,” Kingston says. 

David Adams, CEO, Global Automakers of Canada, says the USMCA “has largely been successful in increasing automotive production and parts production within the United States,” with Canadian assemblers sourcing parts for vehicles sold in America: “This enhances the ability of parts-makers and vehicle manufacturers in both countries to better respond to global competition.”

The North American auto industry is “looking for the certainty the agreement was to establish” without a review “changing the agreement significantly, to allow Canada and the U.S. to continue to focus on external competition. We are stronger working together,” says Adams. 

In Mexico, Asociación Mexicana de la Industria Automotriz Director General Odracir Barquera tells a press conference that fears and expectations should be tempered until Trump’s policies become clear. 

“At the moment it’s difficult to know whether there will be some type of negative effect on investments because there are no clear policies. We only know what has been said and done during the (U.S.) campaign,” he says. 

Trump’s tariff threats “refers to a hypothetical situation” protecting against Chinese companies “that don’t currently produce in Mexico,” Barquera adds. As for the general tariff threat, he advises waiting until Trump 2.0 takes office and “we know exactly what he intends to implement and negotiate on that basis.” 

One question will be whether Tesla will restart plans to build a $5 billion gigafactory in Mexico’s Nuevo León state, whose governor, Samuel García, has said were suspended pending the U.S. election.  

Mexican Minister of Economy Marcelo Ebrard told radio broadcaster Radio Formula on Nov. 7 he intends to meet Tesla CEO Elon Musk soon “so that he tells me exactly what he’s thinking and see what we can do so this project moves forward.”  

The same concern surrounds plans by China’s BYD to build a BEV plant in Mexico, halted while the company searches for a suitable ideal location. However, BYD said on Nov. 5 it would proceed, regardless of the U.S. presidential election’s outcome: “It is a business decision that was made some time ago. A lot of options have been revised with different states to find the best location,” with the automaker seeking “profitability, good performance and good connectivity,” BYD Mexico’s CEO Jorge Vallejo tells Mexican media. (https://www.elfinanciero.com.mx/empresas/2024/11/05/planta-de-byd-es-un-hecho-analizan-en-que-estado-se-podria-instalar/) 

South Korean automaker Kia opened assembly plant near Monterrey, Mexico, in 2016.

Mexico’s chief USMCA negotiator, Kenneth Smith Ramos, tells WardsAuto that Trump’s intention to modify the trade agreement in 2026 to prevent the arrival of Chinese vehicles made in Mexico could change the treaty’s rules of origin. 

“The USMCA is not at risk because is a treaty that has brought great benefits for the United States, Mexico and Canada,” he says, although “a hard posture of President Trump to try to modify the (automotive) rules of origin...making them stricter or by seeking some sort of exclusion of Chinese products” could “endanger the balance” of the agreement, he warns. This could spark changes regarding other industries, with Mexico and Canada possibly demanding “tariffs on certain American-made goods,” he says. 

Moreover, Japan’s Toyota said on Nov. 7 it would invest $1.4 billion to expand its Tijuana plant in Baja California state and its Apaseo El Grande plant in Guanajuato state. Minister Ebrard confirms the news on social media, and Toyota Motor de México president Luis Lozano adds that the investment will produce new-generation Tacoma and Tacoma HEVs (ttps://x.com/m_ebrard/status/1854689088722682219). 

“Investments in Mexico’s automotive industry will continue to arrive,” says Smith. “It's an industry that is growing thanks to the relocation of companies and the access that the USMCA gives to the American market.” But he warns of future “turbulent relations” with the U.S. through “the government style and the pressure that Donald Trump will put on the Mexican government.” 

Back in Canada, Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing, agrees Trump’s election might be a diversion: “This is really unfortunate. All this energy that’s gone into the industry in investment attraction, growing incumbent companies, supply chains, workforce development – now we have to deal with Trump.” 

– with Elizabeth Machuca in Mexico City