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From Car and Driver

A 5 percent tariff could be instituted as soon as June 10 for all goods imported into the United States from Mexico.

Mexican plants from 13 automakers produced 4.2 million cars in 2018, the majority of which were imported to the U.S.

Mexico also exports 90 percent of its OEM car parts to the U.S.

UPDATE 6/4/19: The Washington Post reports that enough Republican senators will vote for a disapproval resolution against President Trump's Mexican tariffs to potentially block them. If the resolution passes in both the Senate and the House, Congress would be able to override an expected veto from Trump by a two-thirds majority. No resolution has yet been submitted, however.



By next Monday, President Trump has stated, the United States will impose a 5 percent tariff on all Mexican imports "until such time as illegal migrants coming through Mexico, and into our Country, STOP." In the absence of a governmental commitment to any solution that could reform immigration laws and processes, just as when the White House alleged that foreign-made cars are a national security threat, the auto industry is again finding itself entrenched in political disputes.

On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,.. - Donald J. Trump (@realDonaldTrump) May 30, 2019

Trump's stated intention is that Mexico be financially punished for illegal migration, but it is Americans who may also be hurt by additional car tariffs that, until now, had only affected a handful of lower-volume models imported from China. Those cars, such as the Buick Envision, have not risen in price after Trump announced 25 percent tariffs on certain Chinese imports last June. But 13 automakers-U.S., German, Japanese, and Korean-operate 21 plants in Mexico, the majority of which export cars to the United States. They're unlikely to absorb a 5 percent tariff on high-volume models, all of which currently are duty free under the former NAFTA and pending USMCA rules. If the tariff takes effect, sticker prices could rise well more than the few hundred dollars that automakers usually charge with each new model year.



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Here are the 39 new cars and trucks currently built in Mexico and exported to the U.S. (all plant and production data sourced from Automotive News):

Mexican plants built a quarter of the nearly 17 million light-duty vehicles produced in North America last year. According to the International Trade Administration, U.S. suppliers represent a third of all original equipment parts suppliers in Mexico. That industry, which is the world's fifth-largest, exports 90 percent of OEM parts to the U.S. That 5 percent tariff would apply to every last nut and bolt.

The proposed tariffs also contradict the USMCA, which all three countries agreed to ratify in September, that had promised duty-free trade for all of these current products. Wait a week, and things might change again.

This story originally published on June 3, 2019.



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