President Trump has been in office for over a week now, and his efforts to motivate automakers to manufacture vehicles in the U.S. have so far been met with controversy and mixed results. There’s been a substantial amount of press over Ford’s decision to cancel a $1.6 billion assembly plant in Mexico, while still moving small-car production (notably, the Ford Focus) to Ford’s existing Hermosillo Stamping and Assembly plant. The Ford Focus has been in the spotlight, but it’s worth noting that there are many more models that could be affected by Trump’s theoretical 35% tariff. In fact, the automotive industry in Mexico has had a long and stable history.
Understanding automakers’ desire to build in Mexico is relatively easy. Current tariff policy applies a 2.5% import duty on all passenger cars and a 25% import duty on all light-duty trucks. That significantly higher tariff on trucks is the result of the “chicken tax,” implemented in 1963 by President Lyndon B. Johnson. This had the unintended consequence of solidifying the U.S. pickup market by concentrating all light-truck production in the U.S.
The North American Free Trade Agreement (NAFTA) was signed in 1994, which allowed duty-free trade of automobiles between the U.S., Mexico, and Canada, allowing automakers to exploit cheaper wages in Mexico while still being able to produce U.S. vehicles tariff-free. President Trump aims to circumvent that treaty and levy a tax of 35% on any vehicle produced in Mexican manufacturing plants. But this tariff could go well beyond the NAFTA countries, bringing that 35% tariff to German automakers in a move to “motivate” the likes of BMW, Daimler, and Volkswagen to produce more cars in the U.S.
But manufacturing vehicles in Mexico is not a new concept. Ford Motor Company has been assembling vehicles there since 1925. U.S., German, and Japanese automakers produce a large number of vehicles in Mexico and Canada, a large percentage of which are bound for the U.S. market and may get affected by President Trump’s proposed tariff.
Mazda’s foray into the Mexican manufacturing market has been a relatively short one. The plant located in Salamanca, Mexico, is Mazda’s first assembly plant in North America since it ceased production at Ford’s Flat Rock, Michigan, plant. From Salamanca, Mazda develops the majority of North American and European Mazda2s and Mazda3s, arguably Mazda’s most celebrated, popular, and affordable sedan.
The Toluca Car Assembly plant, located in Toluca, Estado de México, Mexico, has been operating continuously since 1968. Opened by Chrysler well before the Fiat-Chrysler merger, the plant has a long portfolio of vehicles including the Dodge Magnum, Plymouth Reliant, Chrysler Sebring, and PT Cruiser. Currently the plant produces U.S.-bound Dodge Journeys, Jeep Compasses, and Fiat 500s.
As mentioned above, NAFTA provided a workaround for automakers to forgo paying the “chicken tax” when importing light-duty pickups, provided that 62.5% of the truck is made in a North American country. This allowed pickup manufacturers, like FCA’s Ram, to manufacture best-selling products in Mexico. Ram splits the production of the Ram 1500 between its U.S. plant in Warren, Michigan, and its Saltillo Truck Assembly plant in Coahuila, Mexico, which opened in 1995. Regular and Crew Cab Ram 1500s, 2500 HDs, and 3500 HDs, as well as Ram Mega Cab and Ram 3500 Chassis Cabs have been built at the plant since 2005.
The Cuautitlán Stamping and Assembly Plant, located in Cuautitlán Izcalli, Mexico, has been an important Ford assembly plant since 1964. Currently, the plant produces the Ford Fiesta hatchback for the North American market. Previous to the Fiesta, the plant had built the Mercury Grand Marquis, Ford Thunderbird, and an array of light-, medium-, and heavy-duty pickup and work trucks.
Honda has been building vehicles in Mexico since 1988. Its first major production plant was located in El Salto, Jalisco, Mexico, which focused on motorcycle and car production, specifically the CR-V in 2007. More recently, Honda increased car production in Mexico with the opening of its Celaya, Guanajuato plant. The Celaya plant, opened in 2014, is Honda’s new center for small-car production in North and Central America, most notably the Honda Fit and HR-V.
Nissan Mexicana built its third plant in Aguascalientes, Mexico, in 2013, expanding the company’s vehicle output in the region from 680,000 to 850,000 units. Nissan Mexicana has been in operation by Nissan since 1966, when Mexico became the first country outside Japan to produce Nissan vehicles. Today, the Aguascalientes plant assembles Sentras, Versa sedans, and Versa Notes.
The Hermosillo Stamping and Assembly plant is another long-standing Ford Motor Company auto assembly facility in Mexico. The future home of the Ford Focus, the Hermosillo, Sonora, manufacturing plant is also the primary facility for building the North American Ford Fusion and Lincoln MKZ. Previous products include the Mercury Tracer, the Mazda 323, and the Ford Escort.
The Puebla Volkswagen facility in Estado de Puebla, Mexico, is the largest Volkswagen manufacturing plant outside Germany. Opened in 1964, the Puebla facility is the Volkswagen Jetta, as well as certain variants of the Volkswagen Golf. The Puebla plant is also now the full-production home of the Volkswagen Beetle, after its production was moved from Emden, Germany.
Like most other truck manufacturers, General Motors delegates the manufacturing of its two primary pickup lineups between its U.S. plant, located in Flint, Michigan, and its Mexican plant, located in Silao, Guanajuato, Mexico. Two titans of the pickup world, the Chevrolet Silverado 1500 and GMC Sierra 1500 Crew Cabs can call Silao home. Since 1994, the Silao Assembly plant has been dedicated to building those pickups, as well as the Escalade, Avalanche, and Suburban, before SUV production was moved to Arlington Assembly after 2013.
Toyota began aggressively developing its pickup truck presence in North America in the 2000s, when it founded the Toyota Motor Manufacturing de Baja California assembly plant in Tijuana, Baja California, and began developing Tacomas for sale across North America. Toyota develops Tacomas there in conjunction with its San Antonio, Texas, plant. Toyota has become a recent target of President Trump’s threat to tax Mexican-made cars, as plans to build a new plant in Guanajuato, Mexico, to house Corolla production are still under way. Toyota ensures the Trump administration that the new plant will not affect current jobs in the U.S.
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