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On May 30, local time, US President Donald Trump warned that if Mexico does not take measures to curb illegal immigration, it will start imposing a 5% tariff on all goods from the Mexican region next month. if the situation continues, the tariff will reach 25% by October, which will undoubtedly directly increase the cost of producers and eventually pass it on to consumers.

Mexico, which is adjacent to the United States, is the main production base for many manufacturers' parts. Volkswagen, Toyota, Hyundai and other companies have parts manufacturing plants or car manufacturing plants in Mexico. Mexico is the production region chosen by many automobile companies after China, while Toyota, Honda, Volkswagen, Mazda, Nissan, Mercedes-Benz, FCA, Ford and General Motors have set up plants in Mexico.

At present, Mexico has become the sixth largest automobile producer in the world, behind China, the United States, Germany, Japan and India. At present, Mexico's annual car production has been close to 4 million, but the actual domestic demand is only more than 1 million, most of which are exported to the United States or Europe.

In the latest data, GM tops the list with annual production capacity of 835000 vehicles, GM has 15 production bases in Mexico, followed by Nissan with 762000 vehicles, FCA ranked third with 639000 vehicles, Volkswagen ranked fourth with 435000 vehicles, Kia 294000 vehicles ranked fifth, Ford 280000 vehicles ranked sixth, Toyota ranked seventh with 190000 vehicles.

Trump's move will deal a blow to three automakers in Detroit as they take advantage of cheap labor costs in Mexico to build cheap models and go back to school in the United States. According to IHS markit, a market research firm, 2.52 million cars were exported from Mexico to the US in 2018, accounting for about 14.6 per cent of US car and light truck sales. Trump had previously spoken in public to help US automakers, but the move took US automakers even more unprepared.

Models produced in Mexico include Chevrolet Solo pickup truck, GMC Sierra pickup truck, Fiat Chrysler Ram full-size pickup truck, Toyota Tacoma pickup truck, Nissan Xuanyi, Volkswagen Jetta, Mazda 3 and other models. These models are the most popular models in the American market.

In japan, Toyota shares fell 2%, Nissan shares fell 5%, and Honda shares fell nearly 4%. Mazda Motors was hit even harder, down nearly 7%. All four companies have production plants in Mexico, which account for about 1/3 of vehicles. The three major Japanese automakers produce only 1.25 million vehicles a year in Mexico, dwarfing the 4 million vehicles in the single market in the United States.

Shares of German carmakers also continued their decline in Frankfurt on Friday. BMW Group, Daimler AG and Volkswagen Group, which have factories in Mexico to take advantage of lower labor costs and US trade agreements with their southern neighbors, fell as much as 2.9% in early trading. A spokesman for Audi, a subsidiary of Volkswagen, said the company was closely monitoring the situation, but it was too early to speculate on the outcome.

Many people believe that the transfer of political issues to economic issues is inappropriate. Trump faces the 2020 election and uses trade policy as a means of canvassing during his campaign. Senator Chuck Grassley R-Iowa said in a statement that Trump was trying to abuse tariffs to fight back against Congress. With regard to Trump's recent means of playing the economic card with high tariffs, many countries and enterprises have been hurt, because this unilateral means of targeting will only harm others at the expense of themselves, we can clearly understand that most of the economic industries in the United States today transfer the production enterprises of the secondary industry to foreign regions. Trump's high tariffs on neighboring countries and China will only increase taxes and fees on ordinary people in disguise. On the other hand, how can ordinary people promote the healthy and healthy development of the economy at home because of the level of high prices and low income, which runs counter to his saying that the interests of the United States are paramount?

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