Mexico's auto exports posted their biggest slump so far this year, data from statistics office INEGI showed on Wednesday, a decline analysts attributed to tariff policies from the US, the biggest market for the Latin American country's top industrial sector.

Mexico auto exports fell 12% in September compared to a year earlier, the steepest decline since December 2025, while monthly output slumped 15%. Domestic sales, however, increased 8%, helping buffer the pain for the key manufacturing industry.

The data comes as government officials review the US-Mexico-Canada free trade pact, but even with talks continuing, Mexican cars still face tariffs of 25%. Mexican officials estimate that complying with rules that stipulate using North American-sourced parts brings the burden down to 10% to 12%.

Cars and containers are seen in the port of Lazaro Cardenas. REUTERS/Edgard Garrido

The two economies became closely intertwined over three decades of successive free trade agreements, but sudden policy shifts and tariffs under the Trump administration have shaken business owners' trust in long-established supply chains.

"This has generated greater uncertainty for carmakers and it has affected production and export decisions," said Janneth Quiroz, economic analysis director at Monex, who warned that Mexico's reliance on the US market is the sector's biggest risk.

"The September data is a warning sign rather than a crisis signal," she said. "If this trend continues into 2027, then we could indeed be talking about a more structural problem for Mexican manufacturing."

General Motors last year announced a $4 billion push to shift some production to the US from Mexico as it navigates turbulent tariff policies. The Chevrolet-maker, alongside Ford and Nissan, posted significant export declines in September.

Mercedes-Benz, which shut a joint plant with Nissan last May, did not produce or export any cars last month, the first time that has happened since it began shipping abroad eight years ago.

However, other companies picked up the slack, notably South Korea's Kia, Germany's BMW and Japan's Mazda, with the latter more than doubling monthly exports.

Mexico's main auto chamber, AMIA, highlighted in a press conference on Wednesday that Mexico remains the top foreign provider of cars in the US, supplying 16% of light vehicles in a market that has shrunk 2% so far this year.

Data from AMIA showed that while exports to the US declined 5% in the first nine months of 2026, Canada — Mexico's next-biggest market — increased its purchases by just over 9%.

Alejandra Vargas, an analyst at Ve Por Mas, or Bx+, warned that a sustained slowdown could impact automakers' investment decisions, along with Mexico's manufacturing activity and overall economic growth.

"The evolution of the trade relationship between Mexico and the United States will continue to be the main factor determining the industry's course in the coming months," she said.