Mexico's Auto Tariff Waiver Shields 11 Carmakers

Mexico limited the five-year tariff waiver for imported car-assembly parts to 11 automakers with production facilities in the country, while seeking lower U.S. duties on Mexican cars and steel. The government says the waiver will protect jobs and attract investment. It hasn't named the eligible companies or disclosed the tariff revenue it will forgo.

Who Gets the Waiver

The Economy Ministry said Friday, Oct. 16, that only 11 light-vehicle makers with production facilities in Mexico could import car-assembly parts without tariffs. The decree appeared Tuesday, Oct. 13, took effect Wednesday, Oct. 14, and runs for five years. It doesn't cover companies without productive facilities in Mexico or vehicles from countries without a trade deal.

The decree changes customs line 9803.00.01, which covers parts and components used to assemble cars. That line carried a 10% import tariff until Oct. 13; it now carries no tariff for five years. Importers need authorization for a bonded warehouse under Mexico's Customs Law and prior ministry permission for every import.

The ministry said the waiver aims to protect jobs, make Mexico more competitive for investment and shift production lines from abroad to automakers already operating in Mexico. Its longer-term goal is to move from assembly toward full car manufacturing, gradually raise local content and reduce imports of finished vehicles from countries without a Mexican trade treaty.

The ministry said guidelines would set minimum levels of complete-vehicle production in Mexico and limits on parts imports as a share of output. The SAT tax agency and ANAM national customs agency will oversee controls. Companies must report vehicle identification numbers for cars built with imported parts and provide data tracing those parts.

The ministry hasn't named the 11 companies, published the guidelines, said which firms had applied, estimated how many vehicles the waiver would cover or disclosed the tariff revenue forgone. In 2025, 0.01% of Mexico's automotive imports used customs line 9803.00.01. The waiver doesn't change the separate tariff of up to 50% on many passenger cars from countries without a trade deal, including China, which Mexico has charged since Jan. 1, 2026.

Tariff Bargaining, No Deal

Economy Secretary Marcelo Ebrard told committees of Mexico's Chamber of Deputies on Friday, Oct. 16, that Mexico expected U.S. tariff reductions on steel and vehicles “in the coming weeks or months.” No deal had been announced, and Ebrard gave no date or target steel rate.

The United States applies duties of 25% on Mexican cars and 50% on steel and aluminium, including finished goods made from them, under national-security rules known as Section 232. Mexico wants no carmaker to pay more than 15%, the rate the United States applies to vehicles from South Korea. Expansión reported that Mexico also wants to keep model-by-model discounts tied to regional content; Ebrard said those discounts already keep the sector's average payment well below 10%. El Universal described Mexico's proposal as a reduction from 25% to 15% regardless of regional content.

Ebrard cited General Motors, which builds in South Korea, Mexico and the United States, and said misaligned tariffs hurt U.S. brands as well as Mexico. He contrasted Mexico's request with Japan's agreement to invest US$500 billion in the United States. Mexico wants a lower car tariff, he said, but it wouldn't make an investment of that size.

Ebrard said about 80% of Mexico's trade with the United States entered without tariffs, later putting the duty-free share of exports at 82% to 85%. He put the average effective tariff on Mexican exports at 3% to 3.2%. Mexico's priority in the USMCA review, he said, was reducing uncertainty from annual reviews after the 16-year extension sought by Mexico and Canada wasn't granted. The fourth round of talks had no date but was expected before the end of the year.

Border Security Powers

The United States announced Friday a temporary restriction on unauthorized drone flights from the ground to 400 feet above it, within one nautical mile north of the Mexico border. The Transportation, War and Homeland Security departments said the restriction would counter cartel drone threats, reduce risks to border operations and protect federal personnel and facilities.

War Secretary Pete Hegseth said, “our warfighters will shoot down any cartel drone that threatens America's sovereignty.” The Federal Aviation Administration published the restriction as a notice to air missions and said operators remain responsible for checking applicable notices. The announcement cited no executive order and gave no end date. DroneXL and Infobae reported an Oct. 19 start and a one-year term; the departments described the restriction as effective Friday.

U.S. Northern Command said on Sept. 4 that its border task force had defeated more than 300 unmanned aircraft in 2026, including more than 100 in August. Northern Command said an Army high-energy laser, first used in operations on Aug. 24, had neutralized 11 cartel-linked drones by Sept. 4. Mexico's defense ministry said U.S. forces downed three drones inside U.S. territory on the nights of Aug. 25 and 26 after notifying the Mexican army; Mexico described them as commercial drones used by migrant smugglers to monitor authorities. The restriction applies north of the border. It imposes no new limit on Mexican airspace.