BIRCH RUN, MI – AUGUST 11: Republican presidential candidate Donald Trump speaks at a press conference before delivering the keynote address at the Genesee and Saginaw Republican Party Lincoln Day Event August 11, 2015 in Birch Run, Michigan. This is Trump’s first campaign event since his Republican debate last week. (Photo by Bill Pugliano/Getty Images)

It was a relatively calm week for the Mexican automotive industry until US President Donald Trump announced a 5 percent tariff on all products imported from Mexico. According to Trump, these tariffs will be enforced starting June 10 and will increase until the influx of illegal immigrants arriving to the US through the US-Mexican border stops. This announcement caused the dollar-peso exchange rate to skid by MX$0.57 per dollar and caused drops in national indexes in Mexico and the US on Friday.

In other news, Groupe Renault and FCA Group are analyzing a potential merger that has the potential to create the third largest automaker worldwide. France vowed to give this merger a green light if employment guarantees are offered. Nissan said it is not opposed to the merger as long as some details are straightened out.

The road is clear. Go ahead!

A Bittersweet Week for Trade

According to Trump, everybody wants to ratify USMCA, including Democrat Nancy Pelosi, head of the US Chamber of Representatives.

The Mexican automotive industry lost US$400 million to US tariffs on steel, according to CANACERO.

Renault by Dirk Gently. CC BY-NC-ND 2.0

The EU promised to reject any initiative from the US regarding limits to imports of European cars and vehicles.

According to Canacintra, there is an urgency to restore confidence among investors. Fighting poverty and crime are key in this process.

Trump declared a tariff war on Mexico. He announced that starting June 10, all products imported from Mexico will be levied a 5 percent tariff that will increase unless Mexico stops immigrants from reaching the US-Mexico border.

Mexico’s Automotive Drive

Samtech Automotive inaugurated a new assembly plant in Leon, Guanajuato focused on cog production.

Miguel Ángel Riquelme, Governor of Coahuila, announced the arrival of US company CVG to the state. The company will produce electric harnesses locally.

Automotive companies based in Mexico must beware changes in workers’ unions. According to experts, around 80 percent of Mexico’s unionized automotive workers are represented by CTM, but this situation could change as new unions appear.

BMW increased its Mexico sales by 1.6 percent in 1Q19 compared to the same period in 2018.

A World-class Merger

Groupe Renault and FCA Group are considering a possible merger that could lead to the creation of the third-largest automotive group.

The merger would be valued at US$35 billion merger and would focus on tackling technological and regulatory changes.

The French government, currently a shareholder of Groupe Renault, will demand employment guarantees to authorize the merger.

Nissan does not oppose the deal, but highlights that several details must be straightened out.

Don’t forget to follow us on twitter at @mexautomotive and @mexautomotriz for the latest industry news.

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