Employees at Kia Corp.’s Mexican plant in Pesqueria, Nuevo Leon, commute to work on March 6, 2025. (Image courtesy of Yonhap)
PESQUERIA, Mexico, March 6 (Korea Bizwire) — South Korean companies with manufacturing bases in Mexico, along with around 100 local partner firms, are struggling to deal with business uncertainties stemming from the unpredictability of U.S. President Donald Trump’s tariff policy on the neighboring country, industry officials said Thursday.
Earlier in the day, Trump signed executive actions to delay 25 percent tariffs on Mexican and Canadian goods covered under the U.S.-Mexico-Canada Agreement (USMCA) until early next month. The reprieve came after a previous monthlong pause.
South Korea’s bilateral trade with Canada and Mexico was tallied at US$19.8 billion in 2023. According to corporate data firm Korea CXO Institute, 25 South Korean conglomerates had operated 110 subsidiaries in Mexico as of 2024.
Kia Corp.’s Mexican plant in Pesqueria, Nuevo Leon, marks its 10th anniversary this year. Built on a 4.99 million-square-meter site, the plant has become one of the leading industrial players in this city located on the outskirts of Monterrey, the second-largest city in Mexico.
The local supplier ecosystem around the plant is extensive, with around 100 partners in the region, according to estimates from the Korea Trade-Investment Promotion Agency, also known as KOTRA.
Local industry officials said a sense of unease has been growing throughout Pesqueria recently.
“As anyone can guess, there is only one reason. It is because of U.S. President Donald Trump’s tariff policies,” a Kia official said.
Last year, Kia produced around 270,000 vehicles at the Pesqueria plant, of which over 60 percent were exported to the U.S.
Industry observers here say the fear of U.S. tariffs within the community has intensified due to the unpredictable nature of Trump’s trade policies.
“It feels like tariff policies are constantly changing, from yesterday afternoon to this morning and again this afternoon,” an official at a Kia parts supplier said, requesting anonymity.
A representative from an auto parts company, who also requested anonymity, echoed the sentiment.
“Of course, a tariff delay is better than an actual imposition, but at this point, some are even saying, self-deprecatingly, that it might be less stressful to just have the tariffs imposed on the announced date,” the person said.
The person added, “We are experiencing firsthand that the worst thing in business management is uncertainty.”
Kia is actively working on diversifying its sales channels to mitigate damage from potential disruptions in its U.S. exports if and when tariff impositions are realized.
“We will continue efforts to expand dealer networks within Mexico while diversifying export destinations, including Europe,” the Kia official said.
Additionally, the Kia official stressed the company is committed to ensuring that its 2,500 employees work in a safe environment while also playing a part in fostering mutual growth with partner companies.
Samsung Electronics Co. and LG Electronics Inc., which also operate plants in Mexico, along with their local suppliers, are reviewing response strategies to potential U.S. tariffs.
Some companies are reportedly eyeing the second half of 2026, during which the U.S. midterm elections are set to be held, as a time window for a decision on whether to relocate their Mexican production bases to avoid negative impacts from Trump’s tariffs.
Others are reportedly considering the timeline for the review and adjustment of the USMCA implementation requirements, which are set to be reassessed by next year.
Some observers, however, note that relocating production bases out of Mexico could end up being an ill-advised move in the long run.
“Depending on developments in the U.S., Mexico could end up becoming an even more strategic location for Korean companies in the future,” said Um Ki-woong, managing attorney at Mundus Apertus, the largest Korean law firm in Mexico. “If they leave Mexico now, returning later will come at significantly higher costs.”
(Yonhap)
