Most of the major auto companies of the world had got very concerned after the threat in early June of this year from United States president Donald Trump about imposing high tariffs on all products imported from Mexico over what he alleged was Mexican apathy to prevent influx of illegal migrants into the through its southern border.
And the latest data of the car industry in Mexico shows the reason why the concerns of the threat of tariffs from Trump were so serious in nature.
According to data available from Mexican auto industry trade group – the Asociacion Mexicana de la Industria Automotriz, in the first half of the current year, about 1.37 million vehicles manufactured in factories in Mexico were sent to the US through its southern border with Mexico which accounted for a total of about 16.3 per cent of the entire US auto market.
That compared to the figures of the same period a year ago, that was 13 per cent higher. Industry experts are now expecting that 2019 would be another record breaking year for Mexican made vehicles exported into the US. According to the Mexican auto industry’s latest report released recently, in 2018, the volume of vehicles exported into the US from Mexico was about 2.6 million – which was a record in itself, and accounted for about 15 per cent of the entire US auto market that year.
The Mexican auto exports into the US saw a 9.2 per cent year on year increase in the month of June this year with a total export of just under 250,000 new cars, trucks and SUVs to the US. these figures also clearly exhibit that most of the major car makers operating in Mexico are still continuing to increase their production and assembling capacity in their factories in the country despite the potential threat of ire from the Trump administration at any point of time.
The latest threat of imposing trade tariffs on Mexican products by Trump was given in early June this year where in the US president threatened of imposing progressive tariffs that would begin at 5 per cent on all goods exported to US form Mexico and increasing by 5 per cent every month till it reaches 25 per cent. Trump had then threatened at that time that these tariffs would be imposed until such time that Mexico acted in a satisfactorily manner to stop influx of illegal immigrants, mostly from Central American into the US. Following the threat, Mexico had taken some measures after nine days of that threat to prevent illegal immigration into the US which satisfied Trump enough to drop the tariff threat.
If the threat had materialized, it would have created huge headaches for auto executives. However, the executives were apparently not deterred as they continued with the existing supply and assembly lines which are deeply embedded in Mexico.
(Adapted from CNBC.com)