Trump's tariffs could impact all carmakers, raising industry concerns

Almost all automakers are going to feel a pinch from the new tariffs imposed by President Trump on Saturday on goods imported from Canada, Mexico and China.

 

Auto manufacturers ship tens of billions of dollars worth of finished automobiles, engines, transmissions and other components each week across the US borders with Canada and Mexico. Billions of dollars more are imported from parts manufacturers in China.

 

The tariffs, which will take effect at 12:01 a.m. on Tuesday, are widely expected to raise the prices that American consumers pay for new automobiles. And the tariffs come at a time when new cars and trucks are already selling for near record prices.

 

 

General Motors, the largest US automaker, will probably be most affected. GM produces many more vehicles in Mexico than any other manufacturer — over 842,000 in 2024, according to MarkLines, an auto-industry data provider. And some of those vehicles are the most important in the firm’s lineup. All of the Chevrolet Equinox and Blazer sport-utility vehicles GM sells in the United States come from Mexico. The Chevrolet Silverado pickup truck, a top-selling model, and the similar GMC Sierra pickup generate huge profits for the company. Of the more than one million of those trucks built last year, nearly half were produced in Canada and Mexico, data from MarkLines shows. 

                                    Reuters  All told, GM plants in Canada and Mexico produced nearly 40 percent of all vehicles the company made last year in North America, the region where it gets most of its revenue and almost all of its profits.

 

Several other automakers, including Stellantis, Toyota, and Honda, also make about 40 percent of their North American cars and trucks in Canada and Mexico but they produce fewer vehicles than GM. So most automakers may not feel the impact of the tariffs as acutely as GM.

 

“Tariffs are a very, very big threat to manufacturers and to auto manufacturing states,” said Patrick Anderson, chief executive of Anderson Economic Group, a consulting firm based in Michigan. “And clearly, GM is more vulnerable than most automakers because of the manufacturing footprint it has in North America.”

 

Anderson said the most immediate impact of the tariffs will be delays and confusion at the border crossings as customs agents, shippers, and ports try to sort out how to deal with the vehicles and parts that are already on trucks and trains headed for the border.

 

He estimated that the tariffs could add $10,000 or more to trucks and other larger vehicles that are shipped into the

 

United States from Canada and Mexico. “Much of that, at least in the short term, is going to get absorbed by customers and auto dealers,” he said.

 

The lobbying group representing the three Detroit automakers, the American Automotive Policy Council, issued a statement, saying that vehicles and parts that comply domestic and regional content rules of the United States-Mexico-Canada Agreement should be exempt from tariffs.

 

“Our American automakers, who invested billions in the US to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American work force,” Matt Blunt, president of the group, said.

 

Jennifer Safavian, the president and chief executive of Autos Drive America, a lobbying group representing foreign-owned automakers with operations in the United States, said in a statement that “the North American auto industry is highly integrated and the imposition of tariffs will be detrimental to American jobs, investment and consumers.”

 

The auto industry will struggle to absorb the cost of the tariffs or to move production to avoid them, Linda Hasenfratz, the executive chairwoman of the auto parts company Linamar, said in a statement to The New York Times.

 

Stellantis, which owns Chrysler, Dodge, Jeep and Ram, produces all of its Chrysler Pacifica minivans at a plant in Windsor, Ontario. It also makes the Dodge Charger muscle car, including a new electric version, there. About two-thirds of its highly profitable Ram pickups are made in the US, but the other third comes from a factory in Saltillo, Mexico.

 

Toyota and Honda rely more heavily on Canada than other manufacturers. Both make more than a million vehicles a year in North America, and plants north of the border account for over a quarter of that.

 

The tariffs create a bind for some companies that do not have many plants in North America. Three of Volkswagen’s top-selling vehicles in the United States are made in Mexico. “We remain a strong advocate for free and fair trade,” Volkswagen said.

 

Like its rivals, Ford Motor produces some key models in Canada and Mexico. But it is less exposed than most. It made nearly 2.5 million vehicles in North America last year, and more than 82 per cent rolled off US assembly lines.