Background on Mexican Auto Industry and Its Importance
Mexico’s automotive industry has been a vital sector for the country’s economy, contributing significantly to its manufacturing output. In 2025, this industry accounted for 24% of the total manufacturing production. The sector’s performance is closely monitored due to its direct impact on various other industries and the overall economy.
Growth in Mexican Auto Exports to the U.S. (2021-2023) and Subsequent Decline
From 2021 to 2023, Mexican auto exports to the United States experienced robust growth, with annual increases of double digits. In 2024, the growth rate was a solid 5.1%. However, this positive trend came to an end in 2025 when Mexican auto exports to the U.S. plummeted by 5.6% annually.
Causes of the Decline
According to Gabriela Siller and Jesús Anacarsis López Flores, analysts from Banco Base, the decline in Mexican auto exports is primarily attributed to tariffs imposed by the U.S. government.
Export Growth to Other Markets vs. U.S.
While Mexican auto exports to the U.S. suffered, there was a 4.6% growth in shipments to the rest of the world. This disparity highlights the significant impact U.S. tariffs have had on Mexico’s auto industry.
Impact on Mexican Manufacturing
The downturn in the auto sector has directly affected Mexican manufacturing as a whole. In 2025, the manufacture of transportation equipment contracted by 5.5%, marking the largest decline since 2020 (-21% in 2020). This contraction is crucial for other industries, as it reduces demand for inputs to various sectors.
Historical Context and Future Risks
In recent years, Mexican auto exports to the U.S. have seen significant growth: 13.7% in 2021, 17.3% in 2022, and 15.3% in 2023. However, Banco Base warns that the projected growth for Mexican exports may face new downside risks in 2026, including deeper automotive production declines due to sector-specific tariffs.
Non-Automotive Manufactured Exports
In 2025, non-automotive manufactured exports accounted for 63.6% of Mexico’s total exports, up from 58.4% in 2024. This proportion has not been this high since 2009 (64.1%), when automotive exports were negatively affected by the Great Recession.
Tariff Disparity Explanation
The discrepancy in the impact of tariffs on Mexican exports stems from the way they were implemented. Tariffs imposed by the U.S. under the International Emergency Economic Powers Act (IEEPA) were not enforced strictly for several months. In contrast, sector-specific tariffs targeting the automotive industry have been consistently applied.
Key Questions and Answers
- What caused the decline in Mexican auto exports to the U.S. in 2025? The decline is primarily attributed to tariffs imposed by the U.S. government on Mexican auto exports.
- How has the Mexican automotive industry performed from 2021 to 2023? The Mexican automotive industry experienced robust growth, with annual increases of double digits from 2021 to 2023.
- What is the current proportion of non-automotive manufactured exports in Mexico’s total exports? In 2025, non-automotive manufactured exports accounted for 63.6% of Mexico’s total exports.
- What are the future risks to Mexican export growth, according to Banco Base? Banco Base warns of new downside risks in 2026, including deeper automotive production declines due to sector-specific tariffs.
