U.S. President Donald Trump has confirmed a 25% tariff on imported vehicles, sending shockwaves through one of the key industries powering Mexico’s industrial real estate sector: automotive manufacturing. This decision poses a direct threat to growth, infrastructure demand, and job creation tied to the auto industry and real estate across Mexico.

Automotive Projects Drive Industrial Real Estate in Mexico

Between 2023 and 2024, 52% of 47 new industrial projects developed by members of the Mexican Association of Private Industrial Parks (AMPIP) were linked to the automotive sector. This trend highlights the deep interconnection between industrial properties in Mexico and the auto manufacturing supply chain.

Even before the pandemic, the auto industry was one of Mexico’s strongest economic drivers. But with the rise of nearshoring, the need for new industrial real estate to host vehicle-related production and logistics operations surged.

Tariffs Could Disrupt a Vital Real Estate Engine

AMPIP data shows that from April 2022 to June 2023, 30% of nearshoring investment projects in Mexico were tied directly to the automotive sector. The newly imposed automotive tariffs in Mexico have since cast doubt on the sustainability of that growth.

According to AMPIP president Jorge Avalos Carpinteyro, tariffs are not just a policy issue—they're a potential disruptor of tariff-sensitive industrial real estate markets. “We reaffirm our commitment to Mexico’s economic development and will continue to work alongside the private sector and government to attract investment and create jobs,” said Avalos in a recent statement.

Current Occupancy and Major Tenants at Risk

Currently, automotive companies are the third most active tenants in Mexico’s industrial real estate sector, behind general manufacturing and logistics. AMPIP reports that 16.5% of Mexico’s industrial inventory is occupied by automotive firms, making this industry a key demand generator for industrial properties in Mexico.

Major manufacturers such as General Motors, Ford, Nissan, and Stellantis operate out of Mexico’s industrial parks. With the rise in automotive tariffs in Mexico, their future footprint is now in question. In fact, General Motors has already announced it is considering relocating part of its North American production back to the U.S.

Economic Risks Extend Beyond Real Estate

The potential relocation or downscaling of automotive operations would not only reduce occupancy in the industrial real estate sector but also threaten employment. According to the Mexican Automotive Industry Association, the industry supports 1 million direct jobs and 3.5 million indirect jobs. Any decline in auto production could send ripple effects throughout the broader economy.

Unity and Long-Term Strategy Needed

The AMPIP calls for a unified national strategy to counter the effects of U.S. protectionist policies. As Avalos notes, “It’s essential to align investment, talent, and infrastructure to maintain Mexico’s competitiveness and ensure that nearshoring translates into long-term transformation.”

The future of the auto industry and real estate in Mexico will depend on how effectively public and private actors can respond to this new reality of tariff-driven economic pressure.