Trump’s Proposed Tariffs Could Cut the Auto Industry Deeper Than We First Thought

Many people think American car companies make all of the components that go into manufacturing a domestic car, but that’s very far from the truth. Even the most American-made cars carry parts made in Asia, Europe, and Central/South America. Canada and Mexico are especially significant automotive trading partners, and Trump’s recently announced tariffs on the country could cut the industry deeper than we initially thought.

The Detroit News reported that the U.S. auto industry imported almost $450 billion worth of goods from the two countries in 2023. Some, including Ford, General Motors, and others, build vehicles north or south of the border and import them for sale here. The Big Three automakers in Detroit could be especially impacted by the tariffs, with the CEO of Anderson Economic Group in East Lansing, Michigan, telling the News, “This is a two-alarm fire for the Michigan economy. No state is as vulnerable as Michigan to a trade war or a sudden escalation of tariffs with Canada.”

Part of the auto industry’s problem may come from retaliatory tariffs from either country, especially those that ship vehicles and components across the borders more than once during the manufacturing process. Ever-escalating tariffs could eventually impact a wide range of products, but it’s the hidden components under the hood of many new cars that could make new cars significantly more expensive.

Automakers are already working with lobbyists and others to lessen the impact of a potential future tariff, though the stock market has already expressed skepticism, with Stellantis and GM stocks falling after Trump’s announcement.

[Images: Stellantis, Ford, GM/Chevrolet]

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