Sheinbaum’s Talk with Trump on Friday: Implications for Trade and Manufacturing in the U.S. and for the Automotive Industry

Mexican President Claudia Sheinbaum said that following a phone call with President Trump Monday morning, the U.S. has agreed to put planned tariffs on Mexico on hold for a month. The move has been confirmed by the White House.

Posting on his Truth Social Platform, Trump said the two leaders had a “very friendly conversation,” and reiterated the troop commitment to securing the border with the U.S. that Sheinbaum announced.

On Tuesday, 10% tariffs on Chinese goods will be in effect along with a 25% import tax on goods from Mexico and Canada. Trudeau will speak with Trump on Monday afternoon, the president said.

If tariffs were put on cars imported from Mexico, for example, they would raise the cost by hundreds of dollars per vehicle. Many of the parts for the vehicles assembled in the U.S. are from companies in Canada or Mexico. A wire from the U.S. to Mexico is bundled into a group of wires and shipped back to the U.S. for installation into a bigger piece of a car.

GeneralMotors is the largest exporter in Mexico. Mexico is the leading supplier of cars and car parts in the United States. It’s the largest provider of TV and computer screens and one out of every three refrigerators in the U.S. comes from Mexico.

“I think everybody knows that Mexico, the US and Canada are very integrated,” said Im in December. It is hard to imagine how a supply chain built over a long period of time can be disrupted.

When tariffs are expected to linger, automakers might be willing to make significant investments in order to avoid them, like relocating where a vehicle is made, or building new supplier relationships. But if a tariff is only going to be in place briefly (or never move beyond a threat), that outlay doesn’t make sense.

The President and CEO of Autos Drive America, a trade group representing international automobile companies, said on Saturday that they want everyone to reach a swift resolution that will provide clarity and stability for the entire US auto industry. The Alliance for automotive innovation stated that “seamless” trade in North America supports a $300 billion auto industry.

On January 31, MEMA, a trade group representing companies that make auto parts and components wrote that the tariffs would have severe consequences for suppliers, workers and consumers.

He told reporters on Monday that the US is not dependent on Canada. He said they don’t need them to make cars.

One significant challenge for automakers — and their surrounding ecosystem of suppliers, dealers and repair shops — is Trump has always said these particular tariffs are meant to motivate policy changes, and are not intended to be permanent. There are some long-term tariffs on China that are meant to help U.S. companies compete with Chinese competitors, and there are a lot of other tariffs on China that are meant to raise government revenue.