MONTERREY, Mexico, March 5 (Xinhua) -- At a plant in Mexico's industrial hub of Monterrey in northern Nuevo Leon state, the hum of machines and the constant flow of airbag assembly reflect the intense activity at TAPEX Mexicana, an airbag manufacturer.

However, a new reality is casting a shadow over the region: On Tuesday, the United States imposed 25 percent tariffs on Mexican exports, a measure that could strongly impact automotive suppliers along Mexico's northern border.

BLOW TO AUTO INDUSTRY

"We are working very hard on costs," said Jorge Cuellar, human resources manager at TAPEX Mexicana.

The company ships most of its production to the United States, so any change in U.S. tariff policies is a risk that cannot be overlooked.

Jose Ruben Reyes, the company's head of production, stressed that the concern is not only for the finished products but also the supplies.

U.S. tariffs on key inputs, such as steel and aluminum, already in force, could significantly increase production costs and possible layoffs, said Reyes, adding that the latest tariffs on Mexican goods would worsen the situation.

On Feb. 10, the U.S. government imposed tariffs of 25 percent on steel and aluminum imports, including those from countries with which it has free trade agreements.

The tariffs have generated great uncertainty in the automotive industry, one of Mexico's leading export sectors.

Monterrey, home to more than 400 auto-related companies, is the engine of the automotive industry in northern Mexico and a fundamental pillar of the country's economy.

Manuel Montoya, general director of the Automotive Cluster of Nuevo Leon, said the state's economy depends heavily on automotive exports, adding that while it is still too early to determine the definitive impact of the tariffs, the signs are not encouraging.

As a result of these tariffs, "we could lose thousands of jobs and see a decline in foreign direct investment," he said. "Any additional tariff can mark the difference between being competitive or not in this market."

RISING COST

Hiroshi Kawai, general manager at TAPEX Monterrey, said the company is already taking preventive measures to tackle any adverse scenario.

"What we have to do is to look at cutting costs and improving continuous automation and use of materials," he said.

Montoya said he believes that given the challenges posed by tariffs, the sector has begun to evaluate strategies to mitigate risk, such as investing in advanced manufacturing technologies and continuously innovating to remain competitive globally.

"Uncertainty is widespread," Montoya said. "We believe that ultimately the tariffs will be paid by the customer, whoever buys a more expensive car, for example. We all agree that this is going to happen; it is an extra cost that will be transferred up the chain."

The U.S. tariffs would also impact Alian Plastics, a manufacturer of plastic components for various industries, including automotive.

Felipe Villareal, Alian's general director, explained that some of the company's products cross the border multiple times before completion, so the increased logistics costs and tariffs at each crossing would present a significant challenge.

"Speaking in percentage calculations, this can really lead to between a 65 and 70 percent increase in the cost of the product. And in the end, that increase in the cost of the product will have to be passed on to the final consumer," he said.

Villareal said the tariffs directly impact companies and the entire supply chain, driving up costs for consumers and reducing the competitiveness of Mexican companies.

"It is quite a strong impact," he said, resulting in decreased demand and production volumes and subsequent unemployment.

Reyes from TAPEX Mexicana said ensuring job continuity is a priority. "People are the most important thing for any company. That is the most indispensable factor in being productive," he said.

While the future remains uncertain, the automotive industry in Monterrey is proactively preparing for potential challenges. By embracing innovation and fostering collaboration, the sector is focused on adapting and building resilience.

Production continues for now, but industry professionals know the landscape may change at any moment.

"Always be cautious," Reyes said. "As Mexicans, we have a lot of work to do. We are a very important country for the sector. Let's not let our guard down." Enditem

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