As President Trump’s once-postponed 25% tariffs on Canada and Mexico are set to become a reality, the auto industry is preparing for higher costs and disruptions to their North American supply chains. “The tariffs are all set,” Trump told reporters, confirming they would take effect the next day. He also announced plans to double tariffs on China from 10% to 20%. Trump described the move as “very exciting” for the auto industry, suggesting it would encourage carmakers to build plants in the U.S. However, industry leaders like Ford CEO Jim Farley have expressed strong opposition, warning that the tariffs could devastate U.S. manufacturing due to reliance on parts from Canada and Mexico.
The North American auto supply chain is highly integrated, with components crossing borders multiple times during production. Analysts estimate the tariffs could increase manufacturing costs by $4,000 to over $10,000 per car. While companies may attempt to mitigate costs through stockpiling or relocating production, analysts predict consumer car prices could rise by an average of $2,700 to $3,000.
Adding to the complexity, other tariffs on steel, aluminum, and potential levies on European vehicles further complicate planning. The uncertainty surrounding the duration and goals of these tariffs has left automakers hesitant to make long-term decisions. Retaliatory tariffs from Canada and Mexico could further escalate the situation.
— news from NPR