Tariffs on goods from Canada, Mexico, and China likely to have profound impact on global automotive industry
Tariffs announced by the Trump administration on goods from Canada, Mexico, and China are expected to have a significant impact on the global automotive industry. The 25% tariff on goods from Canada and Mexico, and an additional 10% on products from China, are likely to have a profound effect on the industry.
Automakers have been taking a “wait-and-see” approach to the tariff threat, but the recent announcement has brought an end to that waiting period. As a result, automakers will need to implement contingency plans to offset additional costs in the coming weeks and months.
The tariffs on Mexico may have the greatest impact on the automotive industry, followed by Canada and then China, depending on the automaker. Shawn Fain, president of the United Auto Workers Union, stated that any tariff action must be followed by a renegotiation of the US-Mexico-Canada Agreement and a full review of the corporate trade regime.
General Motors and other major automakers did not immediately respond to requests for comment, while Honda issued a statement saying that North American auto trade is key to the company’s success and it looks forward to a swift resolution that provides clarity and stability to the region.
The announcement of the tariffs could have a massive impact on the global automotive industry, according to S&P Global Mobility. The company estimates that virtually no automaker or supplier operating in North America would be immune from the tariffs.
The industry is deeply integrated between Canada, Mexico, and the US, with Mexico importing 49.4% of all auto parts from the US and exporting 86.9% of its auto parts production to the US. The tariffs could cost automakers billions of dollars a year, with estimates ranging from $13 billion to $56 billion.
Some of the automakers most at risk from the tariffs include Volkswagen, which is most exposed to tariff risk in Mexico, followed by Nissan Motor and Stellantis. Other automakers, such as Ford, GM, and Toyota, also have significant production in Mexico and would be impacted by the tariffs.
