Japanese Automakers Call for Certainty in the USMCA; Mexico Seeks to Safeguard Its Role in the North American Supply Chain
Japan’s automotive industry has urged the seamless preservation of North American production integration ahead of the USMCA review in 2026, emphasizing that the protection of roughly $87 billion invested in the region is at stake. This stance, submitted by the Japan Automobile Manufacturers Association (JAMA) to the Office of the United States Trade Representative, shines a spotlight on Mexico, where the automotive sector anchors exports, formal employment, and capital inflows within the current wave of manufacturing relocation.
JAMA, which represents 14 brands, defended the three-nation production network that distributes processes among the United States, Mexico, and Canada, with plants for vehicles, engines, transmissions, parts, and, increasingly, batteries. The core of their argument: clear rules and stability under the USMCA sustain long-term investment decisions, keep the region tariff-free, and help offer vehicles at more affordable prices in today’s high-interest environment. The association noted that about three-quarters of the vehicles they sell in the United States are assembled within the region.
The debate on consumer costs was echoed by the American International Automobile Dealers Association (AIADA), which warned that new tariffs would increase vehicle prices and hurt sales. According to their analysis, the average price of a new vehicle in the U.S. market topped $50,000 for the first time in September 2025, with average monthly payments around $800; moreover, estimates from the Center for Automotive Research forecast an additional impact of up to $4,600 per vehicle by 2027 if trade barriers are tightened.
For Mexico, maintaining autmotive integration is a strategic priority. The country hosts a dozen Japanese-brand plants and a dense network of suppliers in the Bajío region and the north, with supply chains crossing the border daily. The sector accounts for a significant share of manufacturing GDP and nearly a third of Mexico’s total exports, and has been a major beneficiary of nearshoring. Nevertheless, the industry still faces bottlenecks: the need for expanded and reliable electricity, congestion at border crossings, and the pressure from a strong peso, which makes imported inputs cheaper but reduces export price competitiveness.
The transition to electric vehicles and the new regulatory landscape in the United States (including incentive eligibility and content restrictions) are redefining the investment equation. Japanese firms have announced battery plants and electrification projects in the U.S., but the Mexican segment must accelerate its own ecosystem: specialized workforce training, increased high-value local content, and regulatory certainty—including in energy—to attract links in batteries, electronics, and automotive software. The 2023 ruling clarifying the calculation of rules of origin under the USMCA remains a key technical precedent approaching 2026.
On the labor front, the United Auto Workers (UAW) has called for higher regional wage floors and questioned Mexico's compliance, arguing that Mexican wages are still lagging. For its part, Mexico has made progress on labor reform implementation, with emblematic cases addressed through the USMCA Rapid Response Mechanism and substantial increases in the minimum wage in recent years. The central discussion in 2026 will be about balancing competitiveness with improved labor standards—while avoiding a race to the bottom with tariffs or rules that fracture supply chains.
The implications for Mexico’s economy are clear: if the USMCA review preserves certainty and manages the technological transition, investment flows and supplier diversification are likely to continue. In contrast, a protectionist shift would raise costs, put upward pressure on consumer prices, and could stall export momentum. In the short term, the domestic challenge is to accelerate infrastructure, energy, and human capital development; externally, it’s to maintain a technical policy agenda that shields integration against political cycles.
In short, JAMA and U.S. distributors are united in the call for certainty and regional coordination. For Mexico, achieving the right balance between competitiveness, labor compliance, and energy capacity will be crucial in sustaining its role as North America’s automotive platform during the USMCA review and in the years beyond.
