These days, the atmosphere in the Mexican city of Puebla is a mix of calm and tension. In the streets of number one hub, vendors are selling their roast chicken from barbecues as always, while a street musician in the background tries to coax a few coins from passersby with his performance.
On the surface, life seems to be going on as usual. And yet, on this day, everyone keeps anxiously checking their phones to hear the latest news from the US, where is about to make his of which country will have to endure what in the future.
When the updates finally popped up on people’s screens, the relief was palpable. The measures coming out of the White House appeared to be better than feared for both the city and the country
A mix of concern and confidence
In Mexico — a country that has fought hard to earn its reputation as a reliable car manufacturing hub — public opinion about Trump’s trade policies, however, remains divided.
Speaking with DW, economics student Fabricio Fernandez says there was “no reason to be afraid,” because “it’s simple — he [Trump] pays the tariffs himself.”
Pensioner Julia, on the other hand, was visibly more concerned. She fears for the future of Puebla as an automotive center.
“It’s all very unsettling. For the people, for the country, for everything. When I go to the supermarket, everything is more expensive, and if jobs disappear, things will get even worse,” she told DW.
Mexico’s auto sector thriving after Trump deal
Thomas Karig recalls Donald Trump’s first term in office during which the US president forced Mexico and Canada to renegotiate the North American Free Trade Agreement (NAFTA) which was finally substituted by the United States-Mexico-Canada Agreement (USMCA).
The new trade pact has led to “strong growth among auto parts suppliers in Mexico,” the 71-year-old business consultant based in Puebla told DW.
Formerly the vice president of corporate relations at in Puebla, Karig attributes this to the share of so-called “regional content” — products made within the North American region — which was a US requirement, and which has since increased by 20.5% percentage points to a total of 75%.
“You could definitely say the renegotiation turned out to be a success story for both the US and Mexico,” Karig said.
After initial fears of a massive tariffs blow to the Mexican economy have subsided, Mexico’s Economy Minister Marcelo Ebrard also showed himself to be more confident in a recent interview with local radio station Radio Formula.
Donald Trump’s “restructuring of global trade” could actually be a major opportunity for Mexico, he said.
“What we saw yesterday was the birth of a new trade and likely also a geopolitical order. One phase is over, and another has begun,” Ebrard stated.
Mexico is in a strong position, he added, thanks to the USMCA pact that was “still in place,” and “extremely valuable for Mexico.”
“We don’t have any reciprocal tariffs. A large portion of our foreign trade — handled through the USMCA — is tariff-free. That’s very good news.”
USCMA on the table again
Thomas Karig even believes that Trump might seek another renegotiation of the trade terms with Mexico with the aim of “further strengthening regional content.” He argued that Mexico had “done well with its measured approach” so far.
“Sure, Mexico could retaliate with tariffs on US products,” Karig noted, “but the question is whether that would really make sense or be productive.”
After all, he added, tariffs are ultimately a tax — one paid either by consumers or by businesses. “And that would really only hurt the Mexican people.”
Business consultant Kenneth Smith Ramos, a former chief negotiator for the Mexican government in the USCMA talks, thinks the Trump administration is determined to “reopen and renegotiate” the agreement, he told reporters on the sidelines of the Logistics World industry event in Mexico City recently.
Despite the Mexican government’s composed attitude toward the trade policies currently being pursued by its neighbor to the north, news from the country’s all-important automotive industry is not all that positive.
Mexican media outlet Milenio reported recently that automaker Stellantis decided to halt production at two of its Mexican plants — Saltillo Van and Toluca — following Trump’s announcement of tariffs on imported cars. And according to news portal Aristegui Noticias, Japanese carmaker Nissan had also temporarily shut down operations at two of its Mexico plants where commercial vehicles are made.
On a brighter note, Sweden’s Volvo is apparently planning to boost its investment in Mexico, according to Economy Minister Ebrard, seeking to spend $700 million (€639 million) on its plant in Cienega de Flores.
This article was originally written in German.
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