U.S. President Donald Trump’s recent threat to impose a 25% tariff on goods imported from Canada and Mexico, effective February 1, 2025, has set off alarm bells for companies across various industries. If these tariffs take hold, they could hit companies hard, especially those relying on manufacturing and supply chains in these two countries.
From carmakers to tech giants, the ripples are expected to be felt far and wide. Take the automotive sector, for instance. As Reuters reported, with a significant portion of U.S. car imports coming from Mexico, several manufacturers could see their prices skyrocket. Audi’s San Jose Chiapa plant in Mexico exports nearly 40,000 cars to the U.S. annually. If the tariffs go into effect, Audi could face higher costs, which would make its Q5 models less appealing to U.S. consumers. Similarly, BMW’s Mexico-based plant, which produces models like the 3 Series, would see its U.S. exports become pricier, possibly hurting demand.
Even Asian automakers like Kia, Honda, and Nissan, all with large Mexican manufacturing operations, will need to brace for impact. These companies ship a hefty number of vehicles to the U.S., and any price hikes could lower their competitive edge.
The effects aren’t confined to the car world. Foxconn, which is building a massive AI server factory in Mexico, could see production costs for U.S. clients rise. Meanwhile, LG Electronics, which manufactures everything from TVs to EV parts in Mexico, could have to rethink its U.S. pricing strategy.
The food and drink sector isn’t immune either. Campari, known for its Espolon tequila, has a strong presence in Mexico. With almost 30% of its U.S. sales coming from Mexico and Canada, it will have to consider how to offset the increased costs should the tariffs come into play.
Big names in the packaged goods industry, like Procter & Gamble and Unilever, will also feel the sting. P&G’s Mexican operations account for about 10% of its U.S. exports, and Unilever relies on Mexico for 2% of its U.S. shipments. Both could face higher prices, which might not sit well with consumers.
Critics argue that the threat of these tariffs is creating uncertainty in global markets, particularly in industries with tight margins and complex supply chains. The impact on U.S. consumers might not be immediately obvious, but if implemented, the tariffs could send prices up and force companies to adjust their strategies. It’s clear that businesses with a stake in Mexico or Canada will have to rethink their game plan, all while navigating an unpredictable political landscape.
For now, the market waits, but companies that depend on cross-border production will need to stay nimble.