Background on the Automotive Industry in North America
The automotive sector in North America, encompassing the United States, Mexico, and Canada, is a significant contributor to employment in the region. According to calculations by the National Industry of Auto Parts (INA), out of the 5.1 million jobs generated by this sector across North America, 3.4 million are based in the US, 1.3 million in Mexico, and only 430,000 in Canada.
US Dominance in Automotive Employment
As the Trump administration prepares to impose a 25% tariff on automotive parts and components from Mexico and Canada, the Mexican auto parts industry has highlighted that the US currently holds 67% of the automotive jobs in North America by 2024. This figure accounts for three million and 400,000 positions out of the total five million and 100,000 jobs generated by the industry across North America, including all its links such as manufacturing, distribution, and commercialization.
Francisco González, president of the INA, emphasized that employment generation by the automotive industry is significantly higher in the US compared to its partners, Mexico and Canada. According to statistics from INEGI (Mexico), the Bureau of Labor Statistics (US), and Statistics Canada, the US automotive industry employs a substantial number of workers.
Employment Distribution in Each Country
In Mexico, the auto parts sector generates nearly two-thirds of automotive employment in the country, accounting for 854,000 jobs or 57% of the sector’s workforce in North America. The US follows with 547,000 jobs (38%), while Canada employs 70,000 workers (8%).
Conversely, in the US, only 23% of employment corresponds to automotive manufacturing, while 54% is in wholesale vehicle and parts sales, and another 23% falls under repair and retail of vehicles.
Strong Integration Between NAFTA Countries
Mexico and Canada together account for nearly half of the US’s imports and exports of motor vehicles and parts, making them crucial partners in the automotive supply chain.
The automotive sector is a dynamic component of the US economy, with jobs accounting for 8% of private-sector employment in the country.
With an annual trilateral trade volume of 1.63 billion dollars, the USMCA has bolstered employment and economic growth in all three nations.
According to INA data, the US is the second-largest producer of auto parts globally, with a value of 285.716 billion dollars in 2023, while Mexico ranks fourth with a production value of 120 billion dollars.
Last year, Mexico was the leading exporter of auto parts to the US, with a 43% share of the country’s imports.
Tariff Implementation and Compliance
González noted that the majority of the auto parts sector in Mexico already complies with T-MEC origin rules, which helps avoid additional tariffs. However, S&P Global consultancy predicts a high likelihood that the 25% tariff on auto parts will be implemented starting May 3, as projected by Trump. The exact implementation date might vary slightly.
Key Questions and Answers
- What is the current distribution of automotive jobs in North America? The US holds 67% (3.4 million) of the 5.1 million automotive jobs in North America, Mexico has 25% (1.3 million), and Canada holds the remaining 8% (430,000).
- Why is the US automotive industry significant? The US automotive sector is a crucial part of the American economy, generating 8% of private-sector employment.
- What is the projected impact of the upcoming tariffs on automotive parts? The 25% tariff on automotive parts from Mexico and Canada is expected to be implemented by May 3, potentially affecting the automotive supply chain and increasing costs.
- How prepared is Mexico’s auto parts sector for these tariffs? Most of Mexico’s auto parts sector already complies with T-MEC origin rules, which should help avoid additional tariffs.
