BMW’s New Factory in Mexico Faces Trump Tariff Hit

BMW AG is formally launching its $1 billion factory in San Luis Potosi, Mexico, next week, just ahead of a threatened 5% U.S. tariff on the cars it makes.

President Donald Trump has vowed to impose the 5% levy on virtually all products from Mexico, beginning June 10. He also says he may steadily increase the tax to 25% by Oct. 1 unless Mexico takes dramatic steps to halt the flow of illegal migrants into the U.S.

Mexican trade envoys say they will seek meetings with their U.S. counterparts in Washington, D.C., next week in hopes of averting the new tariff.

In the meantime, Mexico has joined Canada in moving ahead to ratify the U.S.-Mexico-Canada trade pact they signed with the U.S. last November. One objective of the agreement is to avoid tariffs among the signatories.

The new BMW plant is scheduled to churn out 3 Series sedans—BMW’s most popular model—at an annual rate of 150,000 units. About 70% of the output is earmarked for the North American market.

But Bloomberg News says the plant now may ramp up more slowly than originally expected.