Assuring that investments in the auto parts industry will continue to grow for Mexico in the coming years due to the relocation and electromobility phenomenon, the president of the National Auto Parts Industry (INA), Francisco González, announced that the Mexican government will go to Washington to have the USMCA’s “parallel letters” reconsidered in order to protect the automotive sector from the “tariff storm.”
As a response to eliminating tariffs on the steel and aluminum industry, Mexico could resort to the mechanism of Section 232, the so-called “parallel letters,” which regulate the potential imposition of export restrictions by the United States when this poses a security threat.
However, Letter 232 also stipulates that, even when the sanction is enforced in accordance with the aforementioned law, Mexico and Canada may export vehicles and auto parts, including steel and aluminum, within the limits established in the same Letter without the obligation to pay additional tariffs.
The parallel letters gave Mexico the opportunity to continue exporting up to $110 billion in auto parts to the United States (using import quotas); in the case of light vehicles, there is the opportunity to export up to 4 million vehicles annually without tariffs.
In a press conference, the INA leader stated that in the face of “the storm of tariffs,” Mexico has the tool of having parallel letters recognized, as all the auto parts organizations in North America have made it clear that the auto parts sector not only exchanges goods, but also produces together.
Francisco González commented that he met with Marcelo Ebrard, Minister of Economy, to work on strengthening domestic content in the sector and import substitution. “We are the only sector working on Plan Mexico to attract new companies to produce from Mexico and export under the rules of the USMCA.”
“The INA Board met with Secretary Ebrard and his team, where we presented the sector’s situation, and he thanked the sector for its unity, information, and discipline. We have worked together with the industry, government, and associations from other countries, such as MEMA, with whom we met last week as a team to see how we could maintain this competitive advantage in the three countries,” he commented.
On the eve of the Third International Automotive Industry Supply Summit, to be held in Querétaro, the business leader reiterated that investments are continuing. A company that manufactures electric brakes announced it will set up in Mexico to serve the North American market.
In addition to the sector preparing for these types of events to attract new business and investment, he also noted that an estimated economic impact of $9.5 billion is expected.
Mexico signed a parallel letter in the USMCA negotiations guaranteeing a tariff-free export quota for cars and auto parts if the US imposes national security tariffs.
Source: eleconomista
