Mexico Automotive Industry: Headwinds coming from the North
The Mexican automotive industry has experienced strong growth since the signing of the North American Free Trade Agreement (NAFTA) in 1993. The sector representativeness rose, from 1.5% of GDP and 8.5% of the manufacturing output in 1993, to 3% of GDP and 18% of manufacturing output in 20151. It is currently the world’s seventh-largest vehicle manufacturer and the largest in Latin America (after overtaking Brazil in 2014). However, the industry’s bright performance is not perceived positively by all.
Since the beginning of his election campaign in 2016, United States President Donald Trump has continually attacked the NAFTA. He has blamed the agreement for the deep trade deficit that the US holds with Mexico (USD 71.1 billion in 20172) and for destroying US jobs. The automotive industry is one of his favorite targets, and not by chance: transportation and related equipment represents roughly 13.9% of total US exports to Mexico and 33.7% of total US imports from Mexico. Overall, it is the sector with the greatest trade imbalance within the United States.