At El Grande Group, we pride ourselves in staying well informed and delivering timely information regarding changes within the manufacturing industry.
The recent U.S. midterm elections are sure to have some major effects in this sector for both the United States and Mexico, especially in regards to the United States-Mexico-Canada Agreement(USCMA).
It is of high importance to know how the international political climate can affect your manufacturing company.
What Manufacturers Can Expect
It appears that the current administration’s agenda will include several changes to some major sectors and industries in the United States. This will – by correlation – have an effect on certain manufacturing sectors in Mexico, especially considering that the nation shares a close trade bond with the United States.
According to the Association of Equipment Manufacturers (AEM), changes to policies that should affect the manufacturing industry will include:
Improvement to U.S. Infrastructure
One of the major agenda points of this current administration is improving infrastructure throughout the United States. Because of this, there is likely to be an increased demand for construction equipment, construction vehicles, passenger vehicles, and raw materials.
Manufacturers in these sectors in Mexico are likely to see a rise in production.
Agricultural Policies and Farm Bills
Congress seeks to strengthen and support agricultural policies and farm bills which will likely entail the growth of this particular industry in America.
The agricultural industry requires a large variety of equipment and vehicles; if agricultural policies pass and are implemented, manufacturers within the automotive and agricultural equipment sectors in Mexico are bound to see an increase in demand.
Trade and the USCMA
President Trump has instilled tariffs on China goods worth up to $250 billion. Some of these goods include construction and agricultural equipment, which should help increase the demand for Mexican produced equipment.
However, the tariffs were also applied to different raw materials needed in most manufacturing industries. There were also tariffs placed on aluminum and steel from American trading partners like Canada and Mexico.
On the other hand, the USMCA is bound to help manufacturers in Mexico export certain raw materials into the U.S. at prices competitive with those of China.