International Businesses

How Tariffs Will Impact Your Mexican Operation?

Posted on July 26, 2018 by

Carlos Calderon

Carlos Calderon

Share This

Share on facebook
Share on twitter
Share on linkedin
Share on email

On May 31, the US Department of Commerce announced that tariffs on steel and aluminum were no longer valid for Mexico, Canada and the European Union. Hence, these countries became subject to a 25% and 10% tax on tariffs for these materials effective June 1. The tariffs could complicate the govermental efforts to renegotiate NAFTA with Canada and Mexico. The tariffs for Canada and Mexico are the result of not having a date to get to a conclusion on NAFTA.

Mexico is the fourth main exporter of steel to the US. Materials are primarily used to support the automotive and construction industries. The automotive sector expects that tariffs imposed on steel and aluminum will be temporary. Longer term tariffs will result in consumers paying higher auto costs. This situation impacts the entire chain of production, from parts manufacturers, raw material suppliers and, ultimately, OEMs.

In addition to the higher cost on automobiles, the manufacturing of some electronic devices will also be reflected in consumer pricing. Tariffs could considerably increase the cost of basic supplies for the construction sector, for example, not just steel and aluminum, but oil, cables, beams, pipelines 30 other products. It is estimated that not only the cost will be affected, but it will be necessary to adjust the growth rates for this sector, as well as jobs creation.

It is not an overreach to say that tariffs could cause economic damage as price escalation is likely to weigh on the business community and may derail future economic investments. In macroeconomic terms, Mexico steel exports represent just 1.6% of the total market, and aluminum just 0.3%, however, the impact of imposing barriers between the three countries could lead the way to open other new and more important type of commercial barriers.

Carlos Calderon

Manager

With a passion & commitment to client growth, Carlos helps businesses expand to Mexico from the US and abroad. 

Related Insights

International Businesses

Are You Ready to Sell Your Mexican Subsidiary? 

Posted on April 19, 2022 by

Carlos Calderon
With M&A activity soaring in the U.S., we have been involved in dozens of deals involving U.S. entities with Mexican subsidiaries. These types of businesses have become more attractive to potential buyers for many reasons: China vs. U.S. commercial war, increased freight costs, shipment delays, disruption and operational limitations due to COVID-19; especially for Asian companies.

International Businesses

Russian Sanctions Complicate Banking Around the Globe

Posted on April 12, 2022 by

Sarah Russell
NATO countries have banded together to impose historic sanctions on Russia for their invasion of Ukraine in a display of strength and unity. These sanctions mean that companies currently cannot send payments to Russian banks and trying to get around this can result in significant penalties. While it may seem straightforward, these sanctions have complicated the geopolitical landscape of making international deals that extends beyond the borders of just Ukraine and Russia.  

International Businesses

US Subsidiaries: Beware of Surprise Tax

Posted on March 22, 2022 by

Rob Cheyne
Capital gains made from the sale of personal property are generally associated with the residency of the person making the sale. Foreign investors will need to understand the status of their U.S. stock to predict their tax responsibilities when making deals to avoid any surprises on their tax bills.  Capital gains made from the sale of personal property are generally associated with the residency of the person making the sale. Foreign investors will need to understand the status of their U.S. stock to predict their tax responsibilities when making deals to avoid any surprises on their tax bills.  

Sign up for our newsletters

Get general business and industry-specific news and knowledge straight from our accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Insights & Perspectives

Data-driven decision making: 3 key insights for business owners

What does it take to build a data-driven business? For self-reliant leaders who feel they’ve hit a plateau when it comes to scaling a business, adopting a data-driven approach can be a breakthrough success strategy. Using data in a more focused way helps good engineers become good entrepreneurs. It’s about creating balance. Here we take a look at key insights for business owners when using data in decision making.

Read More

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content