How the Mexico Tariffs Will Impact Affordable Cars

Recently, the White House issued a statement announcing a 5% tariff on all Mexican imports that goes into effect on June 10, 2019. After that date, the White House will increase the tariffs to 10% on July 1, 2019, and then increase them an additional 5% on the first day of each month for the next three months, up to 25%. The tariffs will stay at 25% until Mexico decreases illegal immigration coming through its borders. These tariffs will heavily affect cars made in Mexico.

Politics aside, the potential impact the tariffs will have on automotive components creates a complex situation, since Mexico is one of the top vehicle and auto parts exporters to the United States. For instance, Fiat Chrysler Automobiles (FCA) uses its Saltillo Engine Plant in Mexico to produce Hemi engines found in both Dodge and Jeep SRT trim packages, and complex analysis would be required to measure this detailed level of impact.

Over the past 20 years, an increasing number of automotive companies have added production plants in Mexico, and this brief analysis will focus on the vehicles being produced there. Read our complete list of models produced in Mexico.

The list of vehicles produced in Mexico has some unexpected players, such as the Chevy Silverado Crew Cab, the GMC Sierra Crew Cab, the BMW 3 Series, and the Audi Q5. It’s possible that these vehicles will get price increases at the dealership as a result of the tariffs. However, affordable new vehicles like the Honda HR-V, Nissan Kicks, Nissan Sentra, Chevrolet Trax, and Jeep Compass may be most affected by the tariffs.

That could leave price-sensitive consumers potentially priced out of the new-vehicle market and pushed into the used-vehicle market. However, the used-vehicle market may not be a haven for these shoppers. If the demand for used cars increases, it could drive prices of used vehicles up, creating further challenges for price-sensitive consumers.

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