The steel and aluminum tariff does not just hit Mexico—it shakes the very foundation of North America. In a region where factories have no single nationality and supply chains flow across borders seamlessly, raising barriers to essential raw materials undermines the very core of this integration.

From this perspective, the protectionist logic that seeks to boost the U.S. steel industry ignores an inescapable reality: steel and aluminum are the backbone of manufacturing and construction, two industries that drive the region's competitiveness. As a result, raising the cost of these materials will impact every bridge, every skyscraper, and every vehicle assembled, weakening North America's global economic standing.

A clear example of this deep integration is the journey of a single aluminum piston before it reaches its final user. Its journey begins in Michigan, where aluminum is extracted and sent to Ontario, Canada, for smelting. It then returns to Michigan for initial machining before crossing the border into Mexico, where it receives precision finishing. From there, it goes back to Michigan, where it is assembled into an engine, which is later shipped to Mexico for vehicle installation. The nearly complete car then crosses back to the U.S. for final testing, returns to Mexico for last-minute adjustments, and ultimately ends up in the U.S. for sale.

In total, this small component—designed to convert fluid pressure into motion—crosses the border eight times before ever being used, according to Mexico's Economy Secretary. Its journey highlights the efficiency and sophistication of North America's supply chain, where each country's specialization allows for producing high-value goods at competitive costs.

But what happens if a 25% tariff is applied at each crossing? Production costs would soar, profit margins would shrink, and higher prices would be passed on to consumers. Neither manufacturers nor buyers would escape unscathed.

According to SiiLA, the cost impact on the automotive sector alone would be significant in Mexico, where it accounts for 15% of industrial tenants and one-quarter of total industrial GLA in the key northern, central, and Bajío markets.

However, the impact is not limited to the auto industry. The problem is not Mexican or even Canadian imports. The U.S. Census Bureau's data is clear: The U.S. imports less than 25% of the steel it consumes, and within those imports, Mexico and Canada together account for around 40%—roughly 10% of the country’s total steel consumption. In aluminum, the dependence is even greater—half of what the U.S. consumes is imported, primarily from Canada.

Yet, instead of strengthening its global competitiveness, Washington is making domestic production more expensive. The 25% tariff is not only not an exclusive barrier to China—whose steel exports to the U.S. are minimal—nor solely a threat to Europe, but also an obstacle to America’s closest allies and a burden on its industries.

In an era where every decision impacts technological and economic dominance, this policy does not safeguard jobs—it puts them at risk. It does not protect North America's economy—it weakens it. And if the region continues down this path, nearshoring will lose momentum, investments will seek more predictable markets, and rising costs will impact every assembled product, every real estate development, and every consumer paying the price of misguided protectionism.

Ultimately, it is ironic that this move does not protect U.S. businesses—it undermines North America's industrial advantage.

As this unfolds, industrial real estate remains at the center of a trade battle. Understanding its effects is not optional—it is essential to anticipate the region's future. For more information, visit SiiLA REsource or contact us at contacto@siila.com.mx.