Background on the Situation
The National Agency of Automotive Suppliers (ANAPSA) in Mexico anticipates that by mid-July, the entire automotive industry will be exempt from tariffs imposed by the United States on Mexican imports. This development comes as part of the ongoing review of the U.S.-Mexico-Canada Agreement (T-MEC).
Key Figures and Their Roles
Alberto Bustamante, the director of ANAPSA, explained that factors leading to the termination of Donald Trump’s executive orders on tariffs include the advancement of T-MEC review and political pressure from the U.S. Congress to modify presidential decisions under national security grounds.
Executive Orders and T-MEC Review
During a press conference, Bustamante stated: “We hope that the executive orders regarding tariffs will end for two reasons: first, because T-MEC review is already underway, and second, due to significant political pressure, including calls from within the U.S. Congress for reform of the Trade Act of 1962 and 1974 (Sections 232 for Mexico) and Section 301 for China, requiring congressional approval.”
He further elaborated that the initiation of T-MEC review, combined with U.S. arrangements such as those with China, suggests that these executive orders should be halted by the second week of July to pave the way for T-MEC negotiations or review.
Preparing for Changes in Regulations
During a meeting with various business organizations involved in ANAPSA’s supplier development and collaboration on the Plan Mexico, Bustamante predicted an increase in automotive parts’ origin rules. Mexico should prepare for higher domestic and regional content, he advised.
- Current Regulations: Mexico currently adheres to a 75% origin rule, but it is estimated that this may rise to 85% as part of T-MEC negotiations.
- Regional Content for Vehicles: ANAPSA expects the value of regional content in vehicles to increase to 85%, while automotive parts are estimated to implement a 10% rise for each category.
Anticipated Foreign Direct Investment (FDI)
Bustamante is optimistic that following ANAPSA’s efforts to strengthen domestic production and commercial missions, additional foreign direct investments ranging from $5,000 million to $10,000 million will be realized.
“We are hoping for at least $20,000 million, and potentially reaching $33,000 million (automotive FDI) through these business meetings, commercial missions, and new investments stemming from this ambitious program,” he concluded.
Key Questions and Answers
- Q: Who is Alberto Bustamante, and why is he relevant?
A: Alberto Bustamante is the director of ANAPSA, a crucial organization in Mexico’s automotive industry. His insights are relevant as they shed light on the potential changes in tariffs and regulations affecting Mexico’s automotive sector.
- Q: What is the U.S.-Mexico-Canada Agreement (T-MEC)?
A: The T-MEC is a trade agreement between the United States, Mexico, and Canada that aims to modernize and update the North American Free Trade Agreement (NAFTA).
- Q: What changes are expected in automotive parts’ origin rules?
A: The current 75% origin rule for automotive parts may increase to 85% as part of T-MEC negotiations.
- Q: How much additional Foreign Direct Investment (FDI) is anticipated?
A: ANAPSA expects an additional $5,000 million to $10,000 million in Foreign Direct Investment as a result of their efforts to strengthen domestic production and commercial missions.
