Factories across Mexico, but particularly northern Mexico are likely to feel the impact of U.S. tariffs, which went into effect Tuesday. (Aberu.go/Shutterstock)
   
 

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  Northern Mexican states will feel the greatest impact from US tariffs. Here's why

By Agustina Lopez Castro - Mexico
Tell Us Mexico

MEXICO CITY - The introduction of a 25% tariff by the United States on imports from Mexico is expected to have significant repercussions for Mexico's economy, particularly for the 10 states most reliant on export-oriented manufacturing. These states, located largely in the northern and central Bajío regions—such as Baja California, Chihuahua, Sonora, and Nuevo León—are particularly vulnerable because over 20% of their GDP depends on trade with the U.S., primarily in sectors like auto manufacturing.

1. Impact on Export-Oriented States

The most affected states—such as Baja California, Chihuahua, Sonora, Coahuila, Nuevo León, and Tamaulipas—rely heavily on industries that directly trade with the U.S. These states are home to major production hubs for automobiles and electronics, industries that are tightly interlinked with supply chains across the border. For example, many of these regions have maquiladoras (factories for foreign firms) that assemble products for export to the U.S. A 25% tariff could disrupt these operations by making Mexican exports less cost-competitive, forcing companies to reassess their supply chains and consider alternative locations.

In these states, local economies are intertwined with U.S. trade to such a degree that significant tariffs could lead to job losses, reduced industrial output, and a decrease in public revenue. For instance, Coahuila and Nuevo León have seen massive investments from international automotive companies in recent years. Tariffs could cause these companies to curtail production or shift focus to non-Mexican plants.


Steel manufacturing is another Mexican industry expected to be hard hit by U.S. tariffs. (Alto Hornos de Mexico)

2. Vulnerable Sectors

Transportation equipment manufacturing, including the automotive sector, is singled out as the most vulnerable. This includes the production of motor vehicles, trailers, and specialized machinery. Electrical equipment manufacturing—another crucial sector—is also poised to take a hit, as Mexico plays a significant role in assembling components like wiring systems, batteries, and sensors for export to the U.S. Steel and aluminum industries, already under strain from previous global trade disputes, would feel further pressure due to increased costs and reduced demand.

3. Regional Economic Diversity

States like Hidalgo and México state, with more diverse economies, show resilience against the direct effects of tariffs. Their GDPs are not dominated by export-driven sectors, and their reliance on trade with the U.S. is comparatively limited (10–20% of GDP). This diversity could shield them from the immediate shock, but the overall market uncertainty—such as hesitancy from international investors—remains a concern.


A Toyota automotive plant located in the northern city of Tijuana. (Baja California) (Omar Martínez/Cuartoscuro)

4. Effects on Private Investment

The uncertainty caused by the tariffs could lead foreign investors to hold off on reinvestment or expansion plans in Mexico. Gabriela Siller from Banco Base highlighted that diminished foreign reinvestment could hit northern Mexico especially hard, as this region has historically attracted multinational corporations for its skilled workforce and proximity to the U.S. This could also hinder Mexico’s ability to compete with other regions, such as Southeast Asia, that are vying for global manufacturing investments.

5. Long-Term Competitiveness

The broader implications of these tariffs go beyond immediate economic impacts. The Mexican Institute for Competitiveness (IMCO) warns of rising production costs, which could erode Mexico's global competitiveness. For industries like automotive, aerospace, and electronics—where cross-border integration is critical—trade barriers could force businesses to reassess their North American operations, with potential repercussions for jobs and economic growth on both sides of the border.



 


 

                      

 
 

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