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Chrysler boss warns that any alteration of the US-Mexico trade deal risks making pickup trucks unaffordable for Americans, after a suggestion from Donald Trump that he could cut imports across the southern border if he was re-elected.
Trump hinted he would block cars built by Chinese companies from importing from Mexico if he became president again, in response to Chinese company BYD’s plan to build a new electric vehicle factory south of the border American.
“You won’t be able to sell these cars if I’m elected,” Trump said at a rally last month in Ohio. He separately suggested imposing tariffs of 50 to 100 percent on Chinese models entering the United States.
Carlos Tavares, who runs Stellantis – owner of the Chrysler, Jeep and RAM brands – said breaking the US-Mexico-Canada agreement would be a “lose-lose” scenario. He said that in addition to higher car prices, such a move would flood the United States with even greater numbers of Mexican immigrants.
“The first obvious consequence is huge inflation. . . because if you stop getting the most cost competitive products. . . your costs skyrocket, then your price skyrockets,” he said. “Then the middle class will no longer be able to buy pick-ups. »
The second problem, he added, is “what to do with Mexicans who no longer have jobs.”
The CUSMA trade agreement between Canada, the United States and Mexico is set to undergo a “review” in 2026 that could result in new terms. However, some Western auto executives now privately believe that if Trump were re-elected in November, he would revise or even cancel the deal.
Several automotive groups have started planning emergency measures regarding factories and investments. “We hope that the border will indeed be closed,” said a senior official. “We need to plan for this.”
Although Tavares declined to name Trump, he said, “It seems like the leader you mention has a clear vision for what you should do on immigration.”
Mexico’s auto and auto parts industries employ nearly a million people and rely heavily on access to the larger U.S. market.
Two-thirds of Mexican auto production is exported to the United States, while many U.S. auto plants rely on Mexican component plants for lower-cost parts.
The country’s auto industry only began to grow after the introduction of the North American Free Trade Agreement in 1994, which allowed parts and cars to travel between the United States and the Mexico without customs duties.
During Trump’s first term, the agreement was recast as “USMCA.”
BYD, which already sells cars in Mexico, plans to build an auto factory in the country, which would allow it to begin supplying the lucrative U.S. market.
Tavares also warned that American buyers would be willing to shift to Chinese car brands, despite geopolitical tensions between the two countries.
“If I look at the United States, everyone tends to think they are protected. [the Chinese] will not enter,” he said. “But in the 1970s the Japanese came, in the ’90s the Koreans came, and if you can’t make your pickup trucks affordable, you have a problem.”
