President Donald Trump’s recent imposition of sweeping tariffs (25% on automotive imports from Canada and Mexico and 10% on imports from China) is sending shockwaves through the auto industry and raising fears about its future. Trump pushed for these tariffs citing concerns over illegal immigration, fentanyl trafficking, and fostering American manufacturing. However, industry leaders and analysts fear that such sweeping measures might do more harm than good.
The automotive industry relies heavily on cross-border trade, with Canada and Mexico alone sending 90% of their vehicle exports to the United States . The Detroit Regional Chamber, along with MichAuto, has warned of catastrophic consequences for Michigan’s economy and beyond. “Our economies are inextricably linked,” said MichAuto’s Glenn Stevens Jr., highlighting how manufacturing jobs and consumer prices will bear the brunt of higher costs.
These tariffs have already sparked widespread criticism. According to the Chamber, the solution lies in leveraging existing agreements like the United States-Mexico-Canada Agreement (USMCA) to address trade imbalances instead of punitive tariffs that disrupt supply chains.
United Auto Workers (UAW) President Shawn Fain voiced both support and criticism of the tariffs. While the union backs policy changes to combat offshoring and protect American jobs from corporations exploiting cheaper labor abroad, Fain lambasted Trump for using workers as “pawns” in unrelated battles over immigration and drug policy. “If Trump is serious about fixing decades of anti-worker trade policies, he should renegotiate flawed trade deals like NAFTA, USMCA, and those under the WTO,” Fain declared.
Automakers are not standing still. With the potential to upend major operations, manufacturers like Ford, General Motors, Toyota, and Volkswagen are preparing strategies to mitigate impacts. Ford, for example, has highlighted its ability to adjust production, though company leaders remain guarded about their long-term approach.
General Motors, which imported nearly 750,000 vehicles in 2024 from Canada and Mexico, faces significant exposure. CEO Mary Barra discussed how GM was proactive in voicing concerns to Congress while readying contingency plans, such as increasing U.S. production capacity to offset tariffs. Still, Barra acknowledged the looming upheaval: “It’s not ideal, but we have levers to pull”.
Meanwhile, firms like Honda and Stellantis have raised alarms about the sustainability of manufacturing decisions. Stellantis CFO Doug Ostermann admitted that while the company could shift some production to U.S. plants, this approach represents a less-than-ideal pivot for automakers that rely on highly integrated supply chains.
The list of impacted automakers reads like a who’s who of the global automotive landscape—Audi, BMW, Kia, and Nissan, all of whom have plants in Mexico or Canada, now face uncertainty. Toyota, which moved production of its Tacoma pickup entirely to Mexico, may find its immensely popular vehicle saddled with price hikes .
If tariffs persist, companies like Mazda are reconsidering future investments in Mexico, while Honda has indicated it might need to relocate production entirely.
While Trump aims to sound tough on American jobs and manufacturing, critics argue that the tariffs could cripple the very industry he promised to protect. By increasing costs on imports, these measures are likely to trickle down to consumers, pushing up car prices across showrooms in the U.S. and possibly driving automakers to curtail production or investments.
As the automotive industry braces for impact, the long-term effects of this trade war could ripple throughout supply chains. With automakers vocalising their concerns, one question remains: will the tariffs bolster U.S. manufacturing, or will they throttle an industry that depends on global integration? Only time—and swift policymaking—will tell.
