Impact of Tariffs on BYD’s Operations in Mexico and the US
Chinese car manufacturer BYD is taking steps to mitigate the effects of potential tariffs imposed by the US and Mexico. Following President Trump’s threat of new tariffs on imports from China, Canada, and Mexico, BYD’s plans for a car plant in Mexico have been put on hold.
BYD’s Initial Plans for Mexico
Before Trump’s presidency, BYD was preparing to build an electric car plant in Mexico. The company had begun searching for sites in February 2024 and launched the BYD Shark NEV in Mexico in May 2024, aiming to expand sales in North America and Australia.
Stalled Plans and New Strategies
However, with Trump’s victory, BYD’s plans for a Mexican car plant have stalled. The company is likely waiting to see if the US will impose higher tariffs on imports from Mexico. To protect itself from potential tariffs in the US, BYD has asked its suppliers to reduce costs by 10% from 2025, aligning with the 10% tariff on Chinese imports into the US.
Mexico as a Market, Not an Export Base
BYD’s intention in Mexico is to supply only the local market, not use it as a base for exporting cars to the US or Canada. Initially, the company planned to avoid direct US tariffs through a manufacturing plant in Mexico, but Trump’s threat of a 25% tariff on products from Canada and Mexico has changed the story.
BYD’s Global Position and Sales
Despite the challenges, BYD remains the world’s first automobile manufacturer to achieve a production of over 10 million new energy vehicles. The company’s cumulative sales exceeded 3.25 million units in the first ten months of 2024, with projections indicating sales will exceed 4.2 million units by the end of the year.
Uncertainty and Potential Tariffs
Trump’s proposal of 25% tariffs on imports from Mexico has put many businesses, including BYD, on edge. The Mexican government has threatened to impose tariffs on US products if Trump imposes the 25% tariffs. BYD, like other manufacturers, is uncertain about the future, as tariffs on products from China would equally affect the company.