U.S. President Donald Trump’s threat to impose steep tariffs on Chinese goods, including electric vehicles (EVs) and auto parts, is raising concerns over the future of Mexico’s rapidly growing EV manufacturing sector. Industry leaders warn that new trade barriers could slow investment, disrupt supply chains, and jeopardize Mexico’s position as a key player in North America’s clean energy transition.

Mexico’s EV Boom Under Threat

Over the past decade, Mexico has emerged as a critical hub for EV production, attracting billions in investments from global automakers—including Chinese companies seeking to avoid U.S. tariffs. Factories in states like Nuevo León and Coahuila now supply batteries, components, and fully assembled EVs to the U.S. market under the favorable terms of the USMCA (U.S.-Mexico-Canada Agreement).

However, Trump’s campaign pledge to impose tariffs as high as 60% on Chinese imports—and potentially on vehicles made in Mexico with Chinese ties—has cast uncertainty over the sector. Analysts fear such measures could derail Mexico’s EV ambitions by making exports to the U.S. less competitive.

Chinese Automakers in the Crosshairs

Chinese EV manufacturers, including BYD and SAIC (owner of MG), have expanded operations in Mexico, betting on the country’s trade benefits and proximity to the U.S. But U.S. lawmakers have increasingly scrutinized these investments, accusing China of using Mexico as a backdoor to bypass American tariffs.

“If the U.S. slaps new restrictions on Mexican-made EVs with Chinese parts, it could force a major rethink of supply chains,” said Laura González, an auto industry analyst in Monterrey. “Some companies may delay or cancel projects altogether.”

Political and Economic Fallout

The Mexican government has promoted EV manufacturing as a cornerstone of its economic growth strategy, offering tax incentives and infrastructure support. A slowdown in the sector could impact job creation and foreign investment.

Meanwhile, U.S. officials are debating stricter “rules of origin” requirements to prevent Chinese automakers from exploiting USMCA benefits. The Biden administration has already moved to curb Chinese EV imports over data security concerns, and Trump’s proposed policies could go even further.

What’s Next?

With the U.S. election looming, automakers in Mexico are bracing for potential disruptions. Some may pivot to sourcing more components locally or from U.S. suppliers to avoid tariffs, while others could scale back expansion plans.

“Mexico’s EV industry is at a crossroads,” said Carlos Hernández, a trade economist in Mexico City. “The next U.S. president’s trade policies will determine whether it thrives or stalls.”

As the global race for EV dominance intensifies, Mexico’s role hangs in the balance—caught between geopolitical tensions and its ambition to become an automotive powerhouse.