SAN DIEGO (Border Report) — President Donald Trump this week reversed course on tariffs on auto parts manufactured south of the border, something President Claudia Sheinbaum and other Mexican officials hailed as a victory for their economy.
Sheinbaum said this will help her country’s auto industry “flourish” and create an “additional comparative advantage.”
Mexican Secretary of the Economy Marcelo Ebrard said the tariffs had become a major area of concern and stated the elimination of tariffs, as prescribed in the U.S.-Mexico-Canada trade agreement, must be followed to achieve true free commerce.
“The agreement was very clear that no tariffs be placed on auto parts made in Mexico and Canada,” he said.
On April 29, Trump signed an order that removes tariffs on auto parts made in Mexico or Canada, and used to manufacture cars in the United States.
The president called it “a little bit of a break,” for the American auto industry.
“They took in parts from all over the world, I don’t want that. I want them to make their parts here. But I gave them a little bit of time,” he said. “It’s called a little flexibility, we give them a little time before we slaughter them if they don’t do this.”
According to the New York Times, the rules now “leave in place an exemption for parts imported from Canada and Mexico that comply with a treaty [the USMCA] that Mr. Trump negotiated during his first term.”
The White House issued a fact sheet that explained the president’s new stance on tariffs placed on carmakers who use parts made in Mexico.
Trump wants all auto parts to be manufactured in the U.S. within two years time.
“If a manufacturer builds a car in the U.S. that has 85% U.S. or USMCA content, the manufacturer effectively will not owe tariffs on that vehicle’s production for the first year,” read the fact sheet.
The 25% tariff on autos assembled in Mexico remains, but the removal of tariffs on auto Mexican car parts lessens the impact, according to Ebrard.
“This was an important advancement for our country,” he said.