Exports from Mexico and Canada account for 49% of US automotive purchases
Between January and October 2021, Mexico and Canada accounted for almost half of automotive exports to the United States, 49.2%, equivalent to 141,591 million dollars, according to data from the Department of Commerce.
These figures have been maintained over the last decade at values between 47.4% and 52%, promoted by the freedom of tariffs established between the three countries. As a result, Mexico and Canada now account for 97% of motor vehicle imports and 70% of spare parts, according to a US congressional analysis.
The growth of the automotive industry has been most evident in Mexico, making it the producer of 23% of continental vehicles and considerably developing the duty-free market for spare parts.
Mexico and Canada have developed common challenges through their T-MEC relationship. In this regard, they have generated similar controversies regarding the way the US calculates the regional content value as a member of the three-country agreement, and have serious concerns about US subsidies for electric vehicle sales.
Due to President Joe Biden's Better Rebuild Act, there have been strong tensions between Canada and Mexico against the United States. The resolution proposes to give US consumers a tax credit of up to 12,500 dollars for the purchase of US-produced electric vehicles.
Mexico and Canada will be affected by this proposal as they have different car factories in their respective countries, assembling and producing different parts. Biden's move will bring many production lines in Mexico and Canada back to the US.
However, the initiative is going through a difficult time in the US Congress, after Democratic Senator Joe Manchin announced that he would not support the initiative next year.
The importance of the automotive industry in the United States makes the sector a major employer in the nation, with more than 900,000 jobs in 2021, of which 712,000 are in parts manufacturing and 188,000 in vehicle assembly.
Moreover, these jobs have an average production wage in the US of $16 per hour for temporary workers and up to $32 for permanent workers, who have specialised tasks in vehicle assembly. For example, at General Motors the average wage is around 21 dollars per hour, while at Toyota it is around 20 dollars.
In Mexico, on the other hand, average wages are lower than in the US, and industries have a number of different agreements with their workers, based on different compensation methods.
Latin America Coordinator: José Antonio Sierra.
