Since his election victory in November, United States president-elect Donald Trump has repeatedly vowed to slap tariffs on the nation’s high commerce companions, pledging to make this one in all his first acts upon taking workplace on 20 January.
Threats to impose a 25 per cent tariff on all merchandise coming into the US from Canada and Mexico, and a further 10 per cent on these from China, have stoked commerce tensions, and prompted concern for globalised sectors such because the automobile trade.
Automakers have sounded the alarm over the potential penalties of the brand new tariffs, together with elevated prices and potential job losses. Whereas it stays unsure how the second Trump administration’s measures will in the end materialise, corporations in Mexico, Canada and the USA are going through an unpredictable highway forward that might disrupt their provide chains and gross sales.
Mexico is the world’s seventh-largest vehicle producer, and the biggest in Latin America, and has in recent times attracted rising funding within the electrical car sector – notably from China, the world’s main EV producer and market. After explosive progress in home gross sales within the final decade, Chinese language EV makers have sought to increase into new markets and arrange native manufacturing abroad, together with a wave of investments in Mexico.
This growth, nonetheless, has raised alarm within the US, the place some observers have claimed that Chinese language EV makers are utilizing manufacturing in Mexico to avoid tariffs and entry the US market, threatening its personal trade. Issues over defending US trade already noticed outgoing president Joe Biden impose a 100 per cent tariff on electrical autos from China final September.
Amid uncertainty in the course of the election and transition durations, and with political figures within the US calling for tariffs on Chinese language carmakers’ Mexican-made EVs, a number of corporations have paused their manufacturing plans within the nation.
To delve deeper on these points, Dialogue Earth spoke with Gustavo Jiménez, CEO of e-Mobilitas, a Mexico Metropolis-based consultancy centered on decarbonising the transport sector.
With almost 20 years’ expertise in a variety of home and worldwide initiatives, Jiménez has been a key determine within the sector and has suggested a number of Chinese language automakers, together with Sunwin, Zhong Tong and King Lengthy, in addition to governments and growth banks. The interview has been flippantly edited for size and readability.
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Internationally, the commerce warfare between China and the USA is affecting the trade. America has been placing tariffs on electrical autos from China and is threatening to place taxes on autos manufactured in Mexico with Chinese language parts.
Gustavo Jiménez, CEO, e-Mobilitas
Dialogue Earth: Chinese language electrical car makers have made inroads within the Mexican market in recent times, in each gross sales and plans for manufacturing within the nation. What affect has their arrival had in Mexico?
Gustavo Jiménez: Within the final six years, the Chinese language authorities and Chinese language manufacturers have introduced vital technological advances in electrical autos, which made their competitiveness in opposition to inner combustion autos actual.
I used to be one of many first to work on electrical mobility in Mexico, and the reality is that it began very slowly, however over the past six years there have been many modifications. Chinese language autos arrived with a lot decrease costs than European ones. This made costs extra reasonably priced, which motivated governments and the non-public sector to rethink the viability of electromobility as a actuality [in Mexico], and this opened the door for enterprise fashions and price analyses to start to be made.
At e-Mobilitas, we began to match the entire value of possession of an electrical car versus a diesel car over its lifetime. The outcomes had been extra fascinating, with governments, transporters and the non-public sector all seeing that shifting in the direction of electromobility could possibly be more cost effective. Though the environmental affect is vital, economics performed a key position. We don’t stay in Europe, the place CO2 emissions are priced [under the EU emissions trading scheme], so financial viability turned the principle driver of this transition.
How do you assume Donald Trump’s bulletins on his plans for tariffs, and the US’ current 100 per cent price on Chinese language EVs, are affecting the trade?
It is a very fascinating subject that might have an effect on the Mexican economic system and the complete area.
In Mexico, we had a tariff exemption for electrical autos [from countries with which it does not have free trade agreements] till the tip of former president Andrés Manuel] López Obrador’s six-year time period in October 2024, which allowed the arrival of extra electrical autos within the nation, a interval during which electrical public buses had been carried out. The tariff tax is now being resumed, which is 20 per cent for electrical autos.
Internationally, the commerce warfare between China and the USA is affecting the trade. America has been placing tariffs on electrical autos from China and is threatening to place taxes on autos manufactured in Mexico with Chinese language parts.
This might kill investments from Chinese language corporations which can be saying manufacturing plans in Mexico, comparable to BYD and Yutong. If the USA implements these tariffs of as much as 200 per cent, it may have severe financial penalties for Mexico, particularly since lots of the autos manufactured in Mexico are exported to the USA.
Such a battle wouldn’t solely have an effect on investments, however would even have an environmental affect, as it might make it troublesome for cheaper and extra accessible electrical autos to reach. As well as, the USA has an curiosity in defending its personal trade, and this might pose a major problem to the worldwide competitiveness of Chinese language electrical autos.
Mexico is beneath a brand new president with a superb report on sustainability points. What has Claudia Sheinbaum performed to advertise electrical autos in Mexico?
As head of presidency of Mexico Metropolis [from 2018 to 2023], Claudia Sheinbaum started to advertise the electrification of some bus traces, particularly trolleybuses, which generated investments and attracted extra corporations to advertise their companies. As for taxis, they had been very costly at first, however two years in the past extra reasonably priced electrical taxi fashions started to reach.
Since then, we have now considerably elevated the variety of electrical and plug-in hybrid autos in Mexico. Progress charges proceed to rise and costs proceed to fall.
Immediately, there are already electrical autos at costs related to combustion ones, which places Mexico at an important level, as we are going to see extra electrical autos on the streets, which is constructive for each the atmosphere and power effectivity.
Claudia, in her personal place, has at all times been conscious of environmental points. Though the federal authorities has promoted renewable power in a half-hearted method, Claudia has maintained a stronger deal with power consciousness and sustainable mobility.
This six-year time period will certainly take up the problem of renewable power and environmentally pleasant autos, which is essential, because the transportation sector is without doubt one of the largest emitters of greenhouse gases in Mexico.
This text was initially revealed on Dialogue Earth beneath a Artistic Commons licence.
