On November 25, 2024, the U.S. President-elect Donald Trump announced that he would impose a 25% tariff on all Mexican and Canadian products coming into the U.S., and added another 10% tariff to all products from China.  American consumers could lose up to USD 78 billion in spending power each year if new tariffs on imports to the U.S. are implemented, according to a study released by the National Retail Federation (NRF) in this November. The study suggests proposed tariffs would impact product categories like apparel, toys, furniture, household appliances, footwear and travel goods.

Mexican Polyurethane Downstream Markets

Automobiles, refrigerators, clothing and shoes are the main PU downstream markets in Mexico.

Thanks to the recovery of Mexican economy and increasing demand from major downstream industries mentioned above, Mexican PU market has seen continual growth in recent years. The process of “nearshoring” has also boosted the PU demand in Mexico. Mexico’s demand for polyurethane in 2024 Q1 increased by 8% year-on-year, according to the Mexican chemical industry association ANIQ.

Mexico’s local advantage in nearshoring may be weakened following the implementation of the 25% tariff on all Mexican products coming into the U.S. Some manufacturers may bring production back to the U.S., but there will likely still be a significant increase in the import costs of consumer goods produced outside the U.S., which will be borne by American end consumers.

Automobiles: Mexico, the World’s Third-Largest Auto Exporter, Attracts Massive Investments

Mexico surpassed Japan and the U.S. to become the world’s third-largest auto exporter in 2023, according to data from WTO. While Mexico’s auto exports are closely competitive with Japan and the U.S., its growth momentum is stronger compared to other competitors besides China. This is primarily attributed to disruptions in the global auto supply chain during the COVID-19 pandemic, where Chinese carmakers and auto parts manufacturers were able to ensure smooth supplies in Mexico, contributing to impressive progress of Mexico’s auto industry. Data published by the national statistics agency INEGI showed that 12 Chinese carmakers and 39 Chinese auto brands had entered the Mexican market as of December 2023. Massive investments are on the way. Chinese carmakers such as BYD, Chery, SAIC and Dongfeng have also announced plans to establish manufacturing sites in Mexico.

BYD: In July 2024, BYD became the third-best-selling brand in the world with sales of 315,600. On November 13, BYD’s Mexican head said that the company would soon decide on the location for its first plant in Mexico and that administrative procedures for the Mexican facility are currently in progress.

Tesla: In contrast to BYD’s project progress in Mexico, the American automaker Tesla’s factory investment project in Mexico has been paused since July this year. Tesla’s CEO Elon Musk once mentioned that if Trump were to be elected as the new U.S. president, high tariffs would be imposed on cars produced in Mexico.

Refrigerators: Bosch Opens a New Refrigerator Factory in Mexico

Mexico is increasingly becoming a beacon for investment flows from China. Due to nearshoring advantage, 80-85% of home appliances produced in Mexico are exported to the U.S. Chinese household appliance manufacturers have intensified efforts to invest in Mexico, especially in the refrigerator sector, to cover the U.S. and the entire American market. In 2023, nearly 40% of refrigerators imported by the U.S. came from Mexico. Not only Chinese enterprises, but European and American household appliance manufacturers are also stepping up their investments in Mexico. For instance, Whirlpool will invest USD 120 million to expand its factory in Mexico, while Bosch plans to establish its first factory in Mexico, expected to commence operations in 2024 with an annual refrigerator production capacity of up to 600,000 units. In August 2024, BSH Home Appliance Group, the appliance division of Bosch, inaugurated its new factory in Monterrey, Nuevo León, Mexico. With an investment of around EUR 220 million, the new facility will focus on producing large double-door refrigerators. The appliances produced under the Bosch and Thermador brands are specially tailored to the needs of consumers in the North American market.

Impact of Chinese Export of Polyurethane Raw Materials to Mexico

Due to the growth in production and sales of polyurethane products domestically, Mexico has seen an increase in the consumption of polyurethane materials. Taking PMDI, a key raw material for rigid foam, as an example, some of PMDI consumed in Mexico are sourced from China apart from the imports from North America. During January to October 2024, China’s PMDI exports to Mexico amounted to 14.7 kT, up 50.6% year-on-year, according to China’s customs statistics.

Despite Trump administration’s threats of tariffs, Mexico is betting on a bright future for global merchandise trade. Mexico is poised to invest roughly USD 2.7 billion in expanding its Port of Manzanillo, located on the Pacific coast. With the continued expansions of new refrigerator and automobile factories in Mexico as mentioned above, the impact on local polyurethane consumption in Mexico is expected to be limited in the near term.

In terms of the capacity of key polyurethane materials, the MDI capacity in the Americas remains basically stable. Dow has shut down its TDI and polyols plants in South America this year. China’s exports of polyurethane materials to the Americas are expected to stabilize. Nevertheless, there is a growing concern about the possibility of the U.S. imposing additional tariffs on polyurethane materials imported from China.

<Asia-Pacific MDI Market Research Report 2024> and other global polyurethane market research reports published by PUdaily provide real-time, accurate and integrated industry data and market trend analysis for practitioners in the polyurethane industry. They serve as a valuable reference for investors and business strategists, enabling them to grasp market trends, make informed decisions, and collectively promote the high-quality and sustainable development of the polyurethane industry.

For more details or to place an order, please contact:

Telephone: 0086-021-61250980

Email: info@pudaily.com

About Us

PUdaily focuses on creating an information platform for the global polyurethane industry and has established long-term and solid cooperation with various market participants across the global polyurethane industry chain. PUdaily is committed to providing real-time, accurate and integrated market intelligence and research reports to assist customers in making more informed decisions.