Trump's 25% Tariffs On Mexico Could Shake Auto Industry – Nissan May Move Production Elsewhere

Nissan CEO Makoto Uchida recently raised concerns about potential tariffs from the Trump administration, suggesting that if high tariffs are imposed, the company might need to shift production out of Mexico. 

Currently, Nissan exports around 320,000 vehicles from Mexico to the U.S. each year. "If high tariffs are imposed, we need to be ready for this," Uchida said. He added that Nissan is closely monitoring the situation and would explore alternative locations if necessary.

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How Tariffs Could Disrupt The Auto Industry

If Nissan follows through, it could deal a serious blow to Mexico's auto industry. According to UnoTV, Nissan produced nearly 670,000 vehicles in Mexico last year, exporting more than 456,000 of them. 

That puts the automaker in second place for production in the country, behind General Motors GM. Mexico's auto sector is a key pillar of its economy, contributing nearly 4% to the country's GDP, and about 89% of its vehicle production is exported, Statista reports.

For now, President Donald Trump's proposed 25% tariffs on Mexican imports are on hold until at least March, following a conversation with Mexican President Claudia Sheinbaum. Trump has framed the tariffs as a border security measure, not just an economic policy. 

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"It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican soldiers on the Border separating Mexico and the United States," Trump said on Truth Social earlier this month. However, critics argue that Mexico has deployed troops to the border multiple times before.

Even though the tariffs are on pause, companies like Nissan aren't taking any chances. The auto industry, in particular, relies on a highly integrated supply chain, with parts and vehicles crossing the border multiple times before they reach dealerships. 

According to Bloomberg, about 15% of vehicles sold in the U.S. are built in Mexico, and if tariffs take effect, automakers would face higher production costs that could lead to higher prices for consumers.

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And Nissan isn't the only automaker sounding the alarm. Ford F CEO Jim Farley recently described the potential tariffs as "chaos" for the industry. "It's a major hit to the U.S auto industry," he told Fox Business. 

Bloomberg estimates that added costs from tariffs could increase the price of a new car by about $3,000—something that would impact both automakers and buyers.

On a broader level, the U.S. government is also looking at reciprocal tariffs on other countries that charge high premiums on American goods. "By making trade more reciprocal and balanced, we can reduce the trade deficit and improve economic opportunities for American workers," Trump stated in a recent memorandum. 

These shifting trade policies have companies across multiple industries reassessing their supply chains and pricing strategies.

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