The depth of Japanese corporations’ involvement in Mexico’s auto business is seen at Ashimori Trade’s manufacturing facility on an unlimited industrial park in Guanajuato state, 400km north-west of Mexico Metropolis.
A gaggle of principally feminine staff clad in baseball caps and gloves lean over workstations on the plant, within the heartland of Mexico’s auto business. They’re assembling tiny plastic and metallic 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 car meeting plant. The services are a part of the Japanese auto business’s $18bn of funding in Mexico, each in car closing meeting and part manufacturing. The choices have been made primarily based on low labour prices and unfettered entry to the US market. The Ashimori staff additionally make airbags, sunglasses and different parts for Honda, Mazda and different huge 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 business trying newly dangerous. Automakers and their net of suppliers at the moment are making an attempt to work out learn how to undertake any crucial redrawing of future funding plans or reshaping of provide chains.
Trump initially mentioned in early February that he would impose 25 per cent tariffs on all imports from the US’s two fast 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 every other nation.
Any tariffs imposed would have an effect on not solely accomplished automobiles however parts such because the 110,000 tyres that move from Mexico and Canada into the US each day.
Nissan chief government Makoto Uchida mentioned his firm wanted to be ready in case excessive tariffs have been imposed.
“Maybe we will switch the manufacturing of those fashions elsewhere,” he mentioned of the corporate’s Mexican manufacturing.
The Japan Exterior Commerce Organisation (Jetro) has mentioned that 4 vital 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, mentioned funding selections would stay frozen till there was extra certainty.
“It’s extraordinarily troublesome as what Trump says retains altering,” Komura mentioned. “With out realizing something in any respect, we will’t do something when it comes to enterprise selections.”
Nissan was the primary Japanese carmaker to arrange in Mexico, when it began constructing vehicles domestically for the home market within the Nineteen Sixties.
Mazda, Honda, Toyota and lots of suppliers arrived within the 2010s after Mexico liberalised its financial 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 12 months have been exported.
Mireya Solís, a Japan skilled on the Washington-based Brookings Establishment think-tank, mentioned the previous investments have been primarily based on the belief international locations would search financial development via unfettered commerce.
“You can belief you could possibly effectively ship parts and do completely different processes somewhere else,” she mentioned.
But issues have been mounting even earlier than the tariff anxiousness. Naoko Uchiyama, professor at Tokyo College of International Research, mentioned Japanese auto corporations targeted 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 provide compact SUVs however their efficiency has not been pretty much as good as anticipated,” Uchiyama mentioned.
Cautious Japanese traders additionally must grapple with safety dangers. Guanajuato has the very best murder fee of any state in Mexico, presently struggling critical 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, fairly than interested by relocating.
At Japan’s Minebea Mitsumi in Guanajuato, plant supervisor Luis González mentioned 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 may very well be exported earlier than imposition of any tariffs.
“You need to maintain working; we will’t wait round,” he mentioned.
Executives and analysts count on the uncertainty to tug on, partly due to a renegotiation of USMCA due in July subsequent 12 months.
Takao Nakahata, senior economist at Jetro. mentioned that, in a tariff world, Japanese auto corporations have been almost certainly to put money into Southeast Asian international locations, together with Vietnam, fairly than Mexico. They could additionally enhance US manufacturing, he predicted.
“Japanese funding in Mexico goes to be tremendous gradual till about July 2026,” Nakahata mentioned.
González mentioned the primary change thus far was a rise in uncertainty.
“Proper now the intention is searching for how we will make enhancements to cut back the affect of that 25 per cent,” he mentioned. “However it’s a huge impact.”
