Background on Francisco González and the Industria Nacional de Autopartes (INA)
Francisco González, the president of the Industria Nacional de Autopartes (INA), is a prominent figure in Mexico’s automotive industry. INA represents the interests of Mexican auto parts manufacturers, ensuring their competitiveness and growth within the global market. With González’s leadership, INA has been instrumental in fostering long-term contracts between vehicle assemblers and auto parts suppliers, providing stability and resilience to the industry.
Long-Term Contracts as a Safeguard for the Auto Parts Industry
According to González, long-term supply agreements between vehicle assemblers and auto parts suppliers offer a protective shield for Mexico’s automotive parts production and export volumes. These multi-annual contracts establish fixed volumes, prices, and quality standards while ensuring stable supply, reducing costs, facilitating investments, and securing long-term vehicle production.
González emphasized the difficulty of making changes in the auto parts sector, as production cycles span three to ten years. Unlike commodities such as lemons or tomatoes, auto parts require long-term commitments. This makes the industry relatively immune to short-term fluctuations, including those caused by tariffs.
Export and Import Data of Auto Parts Between Mexico and the US
From January to July 2025, Mexico exported auto parts to the US market valued at $47.525 billion and imported these products from the US for $20.425 billion, according to data from the U.S. Department of Commerce.
Trade Tensions and Semiconductor Concerns
While Mexico maintains a relative advantage amidst U.S. tariffs, González highlighted a tense environment regarding the global supply of semiconductors and rare earths. The Chinese government recently announced it would lift restrictions on exporting certain dual-use materials, such as gallium, germanium, and antimony, used in advanced semiconductor production for smartphones and computers.
In return, the U.S. government under President Donald Trump suspended an investigation by the Office of the United States Trade Representative (USTR) into shipbuilding and a rule controlling exports, which previously restricted thousands of Chinese companies from the Entity List.
However, some U.S. lawmakers are preparing a bill that would restrict revenue-sharing agreements like those Trump made with U.S. chipmakers Nvidia and Advanced Micro Devices, allowing these companies to continue selling certain chips to China despite national security concerns.
Impact of Trade Tensions on Auto Parts Industry
González pointed out that the current challenges lie in semiconductor shortages, causing plant shutdowns due to delayed chip deliveries. Global supply chain disruptions, including tariffs and export restrictions on rare earths, are contributing factors.
Over the weekend, reports emerged that China lifted its ban on exporting chips from Nexperia, according to a German automotive industry supplier. This development suggests that the conflict surrounding Nexperia, a semiconductor manufacturer, may be resolving.
U.S. Tariffs on Steel, Aluminum, and Copper
U.S. Customs imposes a 50% tariff on steel, aluminum, and copper imports from around the world. Additionally, a 25% tariff is levied on auto part imports, except those originating from Mexico and Canada, until a methodology is established to determine the U.S. content value.
Key Questions and Answers
- What are long-term contracts in the auto parts industry? Long-term supply agreements between vehicle assemblers and auto parts suppliers establish fixed volumes, prices, and quality standards. These contracts ensure stable supply, reduce costs, facilitate investments, and secure long-term vehicle production.
- Why are long-term contracts important for the Mexican auto parts industry? Long-term contracts provide stability and resilience to the Mexican auto parts industry, protecting it from short-term fluctuations like those caused by tariffs.
- What are the current trade tensions between the US and China affecting the auto parts industry? Trade tensions include restrictions on exporting dual-use materials like gallium, germanium, and antimony, as well as investigations into shipbuilding and export control rules. However, there have been recent developments, such as China lifting its ban on exporting chips from Nexperia.
- What challenges does the auto parts industry face due to trade tensions? The auto parts industry faces semiconductor shortages, causing plant shutdowns due to delayed chip deliveries. Global supply chain disruptions, including tariffs and export restrictions on rare earths, contribute to these challenges.
