Chrysler CEO warns that political threat to Mexico trade deal could impact prices of US pick-ups

The head of Chrysler, Carlos Tavares, has issued a warning about the potential consequences of tampering with the US-Mexico trade agreement. Tavares expressed concerns that if the agreement is broken, pick-up trucks could become unaffordable for Americans.

This warning comes after President Donald Trump suggested that he could restrict imports from Mexico if he is re-elected. Trump specifically mentioned preventing cars built by Chinese companies in Mexico from being sold in the US. Tavares emphasized that such actions could lead to significant inflation and make pick-up trucks out of reach for the middle class.

The US-Mexico-Canada Agreement (USMCA) is set for a review in 2026, but there are fears that Trump may overhaul or even scrap the agreement if re-elected. This uncertainty has prompted some auto groups to start contingency planning around their plants and investments.

Mexico’s car and auto parts industries, which employ nearly 1 million people, heavily rely on access to the US market. Two-thirds of Mexico’s car production is exported to the US, and many US auto factories depend on Mexican component plants for lower-cost parts.

Tavares also raised concerns about the possibility of US consumers turning to Chinese car brands if pick-up trucks become unaffordable. He highlighted the historical precedent of Japanese and Korean car brands entering the US market and emphasized the importance of keeping pick-up trucks affordable for American consumers.

The potential implications of disrupting the US-Mexico trade agreement are significant, and industry leaders like Tavares are urging caution to avoid negative consequences for both the automotive industry and consumers.