The depth of Japanese corporations’ involvement in Mexico’s auto trade is seen at Ashimori Business’s manufacturing facility on an enormous industrial park in Guanajuato state, 400km north-west of Mexico Metropolis.
A gaggle of largely feminine staff clad in baseball caps and gloves lean over workstations on the plant, within the heartland of Mexico’s auto trade. They’re assembling tiny plastic and steel components for seatbelt security mechanisms.
Ashimori, a Japanese car-parts producer, arrange the manufacturing facility in 2012, shortly earlier than Mazda started manufacturing at a close-by automobile meeting plant. The amenities are a part of the Japanese auto trade’s $18bn of funding in Mexico, each in automobile remaining meeting and element manufacturing. The selections have been made primarily based on low labour prices and unfettered entry to the US market. The Ashimori staff additionally make airbags, shades and different elements for Honda, Mazda and different massive producers.
But US President Donald Trump’s menace to impose tariffs on imports to the US from Mexico and Canada has left the huge wager on Mexico by Japan’s automotive trade trying newly dangerous. Automakers and their net of suppliers at the moment are making an attempt to work out the right way to undertake any vital redrawing of future funding plans or reshaping of provide chains.
Trump initially stated in early February that he would impose 25 per cent tariffs on all imports from the US’s two quick neighbours. Whereas he then backed down, hours earlier than they have been to take impact, he introduced solely a 30-day reprieve, till March 4. 4 Japanese auto corporations now construct 1.3mn vehicles in Mexico yearly, greater than producers from some other nation.
Any tariffs imposed would have an effect on not solely accomplished automobiles however elements such because the 110,000 tyres that circulate from Mexico and Canada into the US every single day.
Nissan chief govt Makoto Uchida stated his firm wanted to be ready in case excessive tariffs have been imposed.
“Maybe we are able to switch the manufacturing of those fashions elsewhere,” he stated of the corporate’s Mexican manufacturing.
The Japan Exterior Commerce Organisation (Jetro) has stated that 4 important Japanese investments in Mexico have already been paused due to the uncertainty.
Mazda and Honda have joined Nissan in warning they might transfer away from Mexico. Naohisa Komura, president of Plasess, one other Japanese automotive components provider, which got here to Guanajuato state in 2014, stated funding selections would stay frozen till there was extra certainty.
“It’s extraordinarily tough as what Trump says retains altering,” Komura stated. “With out realizing something in any respect, we are able to’t do something by way of enterprise selections.”
Nissan was the primary Japanese carmaker to arrange in Mexico, when it began constructing vehicles regionally for the home market within the Sixties.
Mazda, Honda, Toyota and plenty of suppliers arrived within the 2010s after Mexico liberalised its economic system by signing the North American Free Commerce Deal (Nafta) with the US and Canada in 1992. Tariffs on cars have been eliminated by 2008. A renegotiated United States-Mexico-Canada Settlement (USMCA) changed Nafta in 2020.
Figures from Mexico’s nationwide statistics company present that 82 per cent of automobiles produced by Japanese automakers in Mexico final yr have been exported.
Mireya Solís, a Japan professional on the Washington-based Brookings Establishment think-tank, stated the previous investments have been primarily based on the idea nations would search financial development by way of unfettered commerce.
“You could possibly belief you can effectively ship elements and do completely different processes in other places,” she stated.
But issues have been mounting even earlier than the tariff anxiousness. Naoko Uchiyama, professor at Tokyo College of International Research, stated Japanese auto corporations centered for a few years on constructing compact vehicles for export to the US after they have been dropping market share to SUVs.
“They shifted to supply compact SUVs however their efficiency has not been nearly as good as anticipated,” Uchiyama stated.
Cautious Japanese buyers additionally should grapple with safety dangers. Guanajuato has the very best murder price of any state in Mexico, at present struggling severe violence from disputes between organised crime teams.
But, for the second, many executives say they’re searching for to maximise their operations’ effectivity, to face up to any tariffs, slightly than eager about relocating.
At Japan’s Minebea Mitsumi in Guanajuato, plant supervisor Luis González stated they have been paying shut consideration to information concerning the potential 25 per cent tariffs however indicated they weren’t but reducing manufacturing.
The corporate was even considering bringing ahead some manufacturing, to make sure it could possibly be exported earlier than imposition of any tariffs.
“You need to hold working; we are able to’t wait round,” he stated.
Executives and analysts count on the uncertainty to pull on, partly due to a renegotiation of USMCA due in July subsequent yr.
Takao Nakahata, senior economist at Jetro. stated that, in a tariff world, Japanese auto corporations have been more than likely to spend money on Southeast Asian nations, together with Vietnam, slightly than Mexico. They could additionally increase US manufacturing, he predicted.
“Japanese funding in Mexico goes to be tremendous sluggish till about July 2026,” Nakahata stated.
González stated the primary change to this point was a rise in uncertainty.
“Proper now the intention is on the lookout for how we are able to make enhancements to scale back the impression of that 25 per cent,” he stated. “But it surely’s a huge impact.”
