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The head of Chrysler has warned that manipulating the US-Mexico trade deal risks making pickup trucks unaffordable for Americans, after Donald Trump suggested he would curb imports across the southern border if re-elected could.
Trump indicated he would block imports of Chinese companies’ cars from Mexico if he were to become president again, responding to Chinese company BYD’s plans for a new electric vehicle factory south of the US border.
“You won’t be able to sell these cars if I get elected,” Trump said at a rally in Ohio last month. He has separately proposed imposing tariffs of 50 to 100 percent on Chinese models imported into the United States.
Carlos Tavares, head of Stellantis – owner of the Chrysler, Jeep and RAM brands – said a breach of the agreement between the US, Mexico and Canada would be a “lose-lose” scenario. He said such a move, in addition to higher car prices, would flood the U.S. with even more Mexican immigrants.
“The first obvious consequence is enormous inflation. . . Because if you stop sourcing the most competitive products. . . Your costs go through the roof, and then your price goes through the roof,” he said. “Then the middle class can no longer buy pickup trucks.”
The second question, he added, is “what to do with the Mexicans who no longer have jobs.”
The USMCA trade agreement between Canada, the United States and Mexico is set to undergo a “review” in 2026 that could lead to new conditions. However, some Western auto executives now privately believe that Trump, if re-elected in November, would revise or even abandon the agreement.
Several automotive companies have started contingency planning around plants and investments. “We expect that the border will indeed be closed,” a senior official said. “We have to plan for that.”
Although Tavares declined to name Trump, he said, “It appears that the leader you mention has a strong opinion about what you should do about immigration.”
Mexico’s auto and auto parts industry employs nearly a million people and relies heavily on access to the larger U.S. market.
Two-thirds of Mexican auto production is exported to the United States, while many U.S. auto factories rely on Mexican component plants for lower-cost parts.
The country’s automotive industry only began to grow after the implementation of the North American Free Trade Agreement in 1994, which allowed duty-free transportation of parts and cars between the United States and Mexico.
During Trump’s first term, the agreement was renamed “USMCA.”
BYD, which already sells cars in Mexico, plans to build a car factory in the country to gain a foothold and supply the lucrative U.S. market.
Tavares also warned that U.S. buyers are willing to switch to Chinese auto brands despite geopolitical tensions between the nations.
“When I look at the US, everyone tends to think that the US is protected, [the Chinese] will not come in,” he said. “But in the 1970s the Japanese came, in the 90s the Koreans came, and if you can’t make your pickups affordable, you have a problem.”