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Manufacturers from Asia, Europe and elsewhere have poured billions into North American supply chains that could be hit by new taxes on Mexico, Canada and China.
Published Jan. 31, 2025Updated Feb. 1, 2025, 5:50 p.m. ET
Mexico’s pitch to companies considering the American market was simple. Worried about vulnerable supply chains? Need to reduce your reliance on China? Want an inexpensive spot close to the United States with favorable trade rules? Try Mexico.
Thousands of companies, from family enterprises to powerhouse brands, in Asia, Europe and elsewhere have done just that in recent years. Adidas, Samsung, Honda, Hyundai, Nestle, Volkswagen, Volvo, Lego and more crowd Mexico’s industrial parks.
That parade has grown following pandemic-related supply chain nightmares and increasing political tensions between the United States and China. Canada — a key partner in the North American production network — has also benefited. Last year, Honda announced plans to invest around $11 billion in new electric vehicle and battery production plants in Ontario, alongside its existing facilities. Toyota and Volvo also have plants in Canada.
But now, President Trump’s decision to impose a 25 percent tariff on goods from Mexico and Canada — and 10 percent on Canadian energy imports — has hit companies like a freak ice storm in summer.
“If you’re an investment officer sitting in a C-suite, how do you decide where you’re going to put money?” asked Mary E. Lovely, a senior fellow at the Peterson Institute for International Economics in Washington.
President Trump himself signed a new trade pact with Mexico and Canada in 2020 during his first term. Now he is, in effect, ripping up that contract.
