Trump's semiconductor tax implications present a blend of opportunities and challenges for Mexico's burgeoning semiconductor sector
A proposed 100% tariff on microchip and semiconductor imports to the United States could have a significant impact on Mexico's semiconductor industry and its automotive sector, according to various reports.
The United States was the main destination for Mexican semiconductor exports in 2024, contributing $466 million or 75% of Mexico's chip exports[1]. States like Baja California, Jalisco, Coahuila, Chihuahua, and Nuevo León were the highest semiconductor sales contributors in Mexico.
The tariff would increase costs substantially for companies importing Mexican semiconductors to the U.S., which could slow growth in Mexico's chip-producing states as foreign semiconductor companies might prefer to establish or expand production within the U.S. to avoid the tariff[1]. This redirection could disrupt existing nearshoring plans where firms intended to invest in Mexico to leverage its skilled workforce and proximity to the U.S.
For the Mexican automotive sector, which is heavily dependent on semiconductors, the tariff would raise the cost of crucial components. Since many Mexican auto manufacturers export vehicles or components to the U.S., they would face higher production costs if semiconductor prices rise due to the tariff, negatively affecting competitiveness and profitability.
The tariff may apply to the exports of the Mexican automotive industry, as many of their electrical components may originate outside Mexico. The increased costs of components, such as electronic cards and chips, could make Mexican vehicles less attractive to the American market.
Despite this, Mexico's semiconductor industry, primarily serving US firms, is unlikely to be affected by the proposed tariff, according to Miguel Ángel Landeros, president of Comce Occidente[1]. Landeros stated that Mexico is analyzing the issue and it is most likely that they will not be affected by the proposed tariff.
The Mexican semiconductor industry could potentially benefit under the USMCA treaty, according to Landeros. Silicon Valley companies plan to invest US $890M in Jalisco in 2025, and Flex, an electronics manufacturing services company, plans to invest $86 million in a microchips research center in Guadalajara. In addition, Foxconn announced plans to develop a massive Nvidia "superchip" plant in Guadalajara, Jalisco, in October 2024.
In conclusion, while the proposed tariff could have a negative impact on the Mexican semiconductor and automotive industries, there is also potential for growth and investment in these sectors. The Mexican government is analyzing the issue carefully to determine the best course of action to protect its industries and maintain strong economic relationships with the United States.
References: [1] El Sol de México and El Informador newspapers reported on the potential impact of the tariff on the Mexican semiconductor and automotive industries. [2] The United States Embassy in Mexico and Canieti presented a joint Master Plan for the Development of the Semiconductor Industry in Mexico for 2024 to 2030. [3] The Master Plan aims to double exports and jobs in the semiconductor industry in Mexico. [4] President Donald Trump announced the potential tariff on Wednesday.
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