Mexico’s automotive importance is here to stay

The Mexican auto-parts market remains resilient

Despite tariff pressure and setbacks throughout the year, Mexico’s market share in the U.S. automotive industry grew in 2025.

• The average car has nearly 30,000 auto parts and about 40% of those parts are imported.
• Mexico was the largest foreign supplier, with a 46.3% share of U.S. auto parts imports.
• Approximately 87% of Mexico’s auto parts exports were destined for the United States.

This reflects a long-term trend

Mexico’s share of auto parts imported to the United States has steadily increased, while Japan and Germany have declined. Much of this trend can be attributed to lower labour costs, growing logistics efficiencies with the United States, the North American Free Trade Agreement (NAFTA) and the U.S.-Mexico-Canada Agreement (USMCA) that replaced it in 2020.

• Mexico produces a wide variety of parts including electrical components, transmissions, clutches, seats, textiles and carpet along with engine, steering and suspension components.
• Mexican parts production is spread across several cities, with the greatest share coming from the state of Coahuila.
• Additional investment in Mexico’s automotive sector - including China-linked OEMs and suppliers - could materialise, but investor decision-making may be influenced by policy uncertainty. The USMCA joint review is scheduled to be completed July 2026, with outcomes still unknown. Meanwhile, Mexico has implemented sweeping tariff increases effective 1 January 2026, on imports from countries without free trade agreements, with China among the most affected. These tariffs are designed to encourage manufacturers operating in Mexico to reduce reliance on inputs from other countries and instead source more components domestically or from free-trade partners.

How automotive companies can plan ahead

• Conduct scenario planning around the USMCA review and how changes could affect your supply chains.
• Optimise your cross-border logistics. If your supply chain relies on parts or components from different Mexican states, conduct lane‑specific planning. Consider an intra-Mexico consolidation strategy as well as examining your consolidation strategy beyond the border. Review your cross-border efficiency, including whether you’re using the optimal crossings and cross-docks, to keep throughput high.
• Build resilience into Mexico sourcing. Plan for volatility across key border gateways. Longer lead times and proactive mode planning can help to mitigate delays.

Revocation of U.S. emissions rules underscores need for flexibility

The U.S. administration has revoked the Endangerment Finding of 2009, which determined that greenhouse gasses pose a risk to public health. The finding was the original basis for the Environmental Protection Agency’s (EPA) climate regulations, thus vehicle emissions standards were simultaneously rescinded. The revocations are effective as of 20 April 2026.

How it affects the auto industry

• While the repeal removes one constraint for vehicle makers, it replaces it with planning volatility. The administration announced the move as a win for U.S. manufacturers, saying it would lower manufacturing costs. Given the global nature of the automotive sector, with its global engineering teams and similar products manufactured for global use, this potentially adds complexity for manufacturers navigating vastly different global environmental requirements.
• The revocations are already being challenged in court, so it’s not clear whether they will stand. States could also enact their own emissions standards.
• Federal policies reversing support for electric vehicles (EVs), just as EV sales in the United States were growing, had already caused uncertainty, strategic overhauls and large write-offs for the industry.

How to plan for what’s next

• Expect ongoing volatility. The federal change may reduce near term compliance pressure, but legal challenges, state regulations and global standards remain a factor.
• Let the market lead. The interplay of regulation and changing consumer preferences will shape future production needs and freight flows. Design supply chains that can flex between conventional vehicles, hybrids and EVs.
• Partner with a logistics provider that has specific expertise in automotive supply chains and can help build agile, resilient supply chains.

New Detroit-Canada bridge set to open soon

The Gordie Howe International bridge is still on track for its opening date and goal of supporting North American trade integration. This is despite trade-related disputes between the United States and Canada. The six-lane, cable-stayed bridge will link Detroit, Michigan, with Windsor, Ontario and is set to open in the next several months.

A delayed opening would affect several industries on each side of the border, including the automotive sector:

• The initial agreement had Canada financing the bridge and collecting tolls to recoup the investment.
• The current U.S. administration believes the United States should own at least half of the bridge, share in the toll proceeds and receive compensation for its expected economic benefits.
• Despite strong language, Canada and the United States remain in trade negotiations, including talks about tariffs introduced early last year and the future of the USMCA.

What it means for logistics

Michigan’s auto industry stands to benefit significantly from the bridge, which is expected to bring big supply chain efficiencies. It’s expected to save 850,000 hours in wait time for commercial truck drivers every year compared to the Ambassador Bridge three miles away, which is one of North America’s busiest border crossings.

U.S. Supreme Court strikes down some tariffs

The U.S. Supreme Court has ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. The ruling ended those duties, including global reciprocal tariffs and tariffs on imports from China, Mexico and Canada that were intended to stop the flow of fentanyl. But it leaves key questions unresolved, most notably on potential refunds.

New tariffs under other legal authorities are widely expected. The administration has instituted a temporary 10% tariff under Section 122 of the 1974 Trade Act. This tariff is limited to 150 days unless an extension is granted by Congress. The administration has signalled it will replace it with permanent tariffs under Section 301.

Section 122 tariffs are added to other existing tariffs, but there are exceptions. Products currently subject to Section 232 tariffs—including auto parts, steel and aluminium—are excluded. However, if only part of a product is subject to Section 232 (for instance because of steel content), Section 122 may still apply to the non 232 portion.

Supply chain leaders should avoid making sourcing decisions based on the ruling and instead stay focused on proven resilience strategies, including diversifying sourcing and using trade programmes where available. One important way to build resilience is by creating a sourcing hierarchy with suppliers from different countries and/or regions.

The hierarchy should prioritise suppliers based on geopolitical realities, business continuity and cost efficiency. A first step toward achieving this is dual sourcing: your current supplier plus a backup in a different country.

While focusing on proven resilience strategies is critical, there are ways to preserve your right to potential refunds:

• Review current customs entries, especially those nearing key deadlines.
• For closed (liquidated) entries, file a protest within 180 days of the liquidation date.
• For open entries, continue to monitor for a liquidation date to take appropriate action.
• Consider keeping in touch to a trade solicitor to discuss if any legal filing should be made with the Court of International Trade.
• Use tools such as U.S. Tariff Impact Analysis, ACE Import Intelligence and U.S. Customs Analytics to make informed decisions.

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