Nissan Moves to Lower Costs on Mexico-Built Models as Tariffs Squeeze U.S. Sales

CEO Ivan Espinosa says 25% duties are making some Mexico-made models hard to sell and the company is targeting cost cuts to boost competitiveness

Nissan Motor Co. is pursuing cost reductions on vehicles produced in Mexico that are subject to a 25% tariff, the automaker's CEO Ivan Espinosa said. With negotiations between the U.S., Mexico and Canada extending beyond a July 1 deadline, Nissan is prioritizing models hit by the levies as the duties put pressure on retail affordability in the U.S. market.

Nissan Moves to Lower Costs on Mexico-Built Models as Tariffs Squeeze U.S. Sales

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Key Points

Nissan is targeting cost cuts on vehicles manufactured in Mexico that face a 25% U.S. tariff.
Protracted trade negotiations between the U.S., Mexico and Canada have extended past a July 1 deadline, leaving the tariff in place for now.
U.S. affordability pressures and near-record new-vehicle prices are central to Nissan’s focus on making tariff-affected models more competitive; impacted sectors include automotive manufacturing and cross-border trade.

Nissan Motor Co. (TYO:7201) is intensifying efforts to reduce costs on models manufactured in Mexico that are being hit with a 25% U.S. tariff, the company’s chief executive officer said.

Speaking on Bloomberg Television Wednesday, CEO Ivan Espinosa laid out the challenge facing a portion of the automaker’s lineup brought in from Mexico. "The duties are making part of the lineup that we are bringing in from Mexico difficult to sell," he said, stressing that Nissan is concentrating on making those vehicles more competitive.

Espinosa framed the move against a backdrop of prolonged trade talks among the United States, Mexico and Canada that have extended past a July 1 deadline for renewing a free trade agreement. With those negotiations unresolved, the 25% tariff remains a central concern for models imported from Mexico.

"Looking at the pressure that the U.S. market has today in terms of affordability, we see that potentially some of the buyers could be moving into this type of vehicle, so we are working very strongly on making them more competitive," Espinosa said on Bloomberg Surveillance.

The CEO’s comments reflect Nissan’s frustration with higher levies imposed by the administration of President Donald Trump on cars built in Mexico. Nissan has sought relief on affordability grounds as average new-vehicle prices sit near record highs, a factor Espinosa cited in explaining why the automaker is pursuing cost adjustments.

Until trade negotiations reach a resolution, Nissan is focusing its cost-reduction measures specifically on those Mexico-produced vehicles affected by the 25% tariff rate. The company appears to be aiming to blunt the tariff-driven price disadvantage in the U.S. market by reducing production and other costs tied to those models.

While Espinosa highlighted potential buyer shifts toward more affordable models, he did not detail particular cost measures or provide a timeline for changes. The statements were limited to the impact of tariffs on sales competitiveness and the company’s intent to act to improve affordability for affected models.

Risks

Ongoing trade talks beyond the July 1 deadline mean the 25% tariff remains in effect, maintaining price pressure on Mexico-built models - this affects the automotive sector and international trade flows.
Higher levies imposed by the U.S. administration are making some Nissan models harder to sell in the United States, introducing sales and revenue risk for the automaker - this impacts vehicle sales and OEM margins.
Elevated new-vehicle prices in the U.S. constrain affordability, which could limit the pool of buyers even if Nissan reduces costs - this poses demand-side risk for the auto market.

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Nissan Moves to Lower Costs on Mexico-Built Models as Tariffs Squeeze U.S. Sales

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