Categories: Cars

U.S. Auto Industry Could Suffer As Trump Threatens a 25 Percent Tariff On All Goods From Canada and Mexico

When politicians talk about tariffs, they’re usually referring to the U.S.’ most prominent economic rivals, like China. That said, President-Elect Trump just picked a fight with two of America’s closest trading partners and the only two countries with which we share a border.

Trump said he would impose 25-percent tariffs on Mexico and Canada on his first day in office. His team’s concerns, on paper at least, include the flow of fentanyl and other drugs across the borders and the numbers of people migrating north. Posting on Truth Social, Trump said, “As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States and its ridiculous Open Borders.”

While Trump may have a concept of a plan to implement the tariffs, he hasn’t yet shared those details. As Politico pointed out, he could lean on the International Emergency Economic Powers Act, which, among other things, gives presidents a high level of economic control after an emergency has been declared. Despite that power, the measures are unlikely to slide through the system without vigorous legal challenges.

Both countries expressed frustration with the announcement and threatened countermeasures of their own. The tariffs could put a heavy burden on the automotive industry, as many companies operate manufacturing facilities and other business centers in Canada and Mexico.

Honda told the Financial Times that a tariff on Mexican imports could raise prices on up to 160,000 of its vehicle shipments and noted that it could drive the automaker to explore alternate factory locations. Others, including General Motors, Volkswagen, Toyota, and Ford, have significant manufacturing footprints across both borders, so we’re likely to see a notable disruption to the industry if the tariffs move forward unaltered and unopposed.

[Images: BMW, Shutterstock, Volkswagen]

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Source: The Truth About Cars

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