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For The Love Of Cars, Avoid A Trade War With Mexico

Government / 35 Comments

Let's hope a deal is made soon. Very soon.

Last week, US President Donald Trump proposed a 5% tariff for all products imported from Mexico, with hikes reaching up to 25% if illegal immigration isn't stopped. Mexican President Andres Manuel Lopez Obrador has already reached out to Trump in order to see if a deal can be reached before the tariffs are implemented on June 10th.

Speaking with Automotive News, Lopez Obrador said he expects "good results" from the trade talks in Washington. Trump's announcement has already impacted the automotive industry with companies like General Motors, Volkswagen, Mazda, Toyota, and Fiat Chrysler all losing billions of dollars of combined market value.

Lopez Obrador said Mexico could be ready to step up in order to limit the recent increase of illegal immigration into the US. "The main thing is to inform about what we're already doing on the migration issue, and if it's necessary to reinforce these measures without violating human rights, we could be prepared to reach that deal," he explained.

The main goal is to avoid a trade war at all costs. "We're doing all we can to reach a deal through dialogue," Lopez Obrador said. "We're not going to get into a trade war, a war of tariffs and of taxes." The Mexican government has a plan ready if Trump does apply tariffs. However, we don't know the details of that plan or its ramifications for the US. Mexico's top farm lobby has proposed targeting agricultural goods from the US, which could hurt the US economy.

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Mexico is the third-largest trade partner for the US, behind China and Canada. Avoiding a trade war is highly advisable. GM is the largest producer and exporter of cars in Mexico but would be far from the only automaker hurt by these tariffs. We are hopeful that the US and Mexico will reach a deal in time but the American economy could suffer if the two countries enter a tit-for-tat tariff war.