The Japanese automaker Nissan has announced that it is evaluating the possibility of relocating its production operations from Mexico due to the impending 25% tariffs proposed by U.S. President Donald Trump. These tariffs, aimed at imported vehicles from Mexico, could severely impact Nissan’s export business, as the company currently ships approximately 320,000 vehicles annually from Mexico to the United States.
How would Trump’s tariffs impact Nissan’s operations?
The proposed tariffs pose a significant challenge to Nissan’s profitability. According to Nissan President and CEO Makoto Uchida, high tariffs would lead to severe implications for the company’s business model. “If high tariffs are imposed, we must be prepared to adapt, and moving production elsewhere might become a necessary step,” Uchida stated during a recent press conference. While the company has not made a final decision, it is closely monitoring the situation and evaluating alternative solutions.
If Nissan decides to leave Mexico, it will need to identify alternative production sites that can accommodate its manufacturing needs while maintaining cost efficiency. Potential destinations could include the United States, where the company already operates manufacturing facilities in Smyrna, Tennessee, and Canton, Mississippi. Other possibilities include expanding operations in Asia or investing in European plants to offset potential losses from the U.S. market.
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How is Nissan’s financial situation affecting this decision?
Nissan’s financial struggles have also played a role in this evaluation. The company reported a staggering 98.4% drop in net profits between April and December, marking one of its worst fiscal years in recent history. To address these financial difficulties, Nissan has outlined a global restructuring plan, which includes a 20% reduction in production, particularly in China, where domestic competition is intensifying.
Is Nissan planning job cuts?
As part of its restructuring strategy, Nissan announced job cuts affecting approximately 9,000 employees worldwide. These layoffs will primarily impact manufacturing facilities in Thailand, as well as shift reductions in the United States, affecting 6,500 workers in its Smyrna and Canton plants between 2025 and 2026. Additionally, the company plans to reduce its indirect workforce by 2,500 employees through voluntary retirement programs and hiring freezes.
General Motors also considers leave Mexico
Nissan is not the only automaker facing challenges due to potential tariffs. General Motors (GM) has also expressed concerns about the economic impact of Trump’s trade policies. In January, GM revealed that it is considering relocating part of its production from Mexico and Canada back to the United States. This decision aligns with GM’s long-term strategy to optimize its manufacturing footprint while navigating political and economic uncertainties.
Mexico remains a crucial hub for global automotive production. In 2024, General Motors produced 22.3% of all light vehicles in Mexico, solidifying its position as the country’s leading automaker. The Chevrolet Silverado and GMC Sierra, two of GM’s most iconic models, are manufactured in Mexico and exported to key international markets, including the United States.
Moreover, GM has a well-established presence in Mexico, with four manufacturing plants in Toluca, Silao, San Luis Potosí, and Ramos Arizpe. The company also operates a regional engineering center and employs over 25,000 workers across the country.
