The U.S. wants to turn the North American auto industry into just the American auto industry — but it might cripple the whole sector in the process.
What happened: U.S. automakers have likely paid around US$10.6 billion in tariffs on parts made in Canada and Mexico so far this year, a new analysis found. That hefty sum is just slightly less than the combined net income of Ford and GM last year.
- The true cost of tariffs to automakers is likely higher, as the calculation doesn’t account for separate tariffs on aluminum or steel or imports from Europe and Asia.
Why it’s happening: Charging carmakers to import parts from Canada and Mexico is part of the Trump administration’s grand plan to do away with North America’s decades-old integrated auto sector and bring the whole supply chain inside U.S. borders.
- To some extent, that plan is working — automakers like Stellantis are cancelling production in Canada and moving it to the U.S.
Why it matters: U.S. tariffs aren’t just hurting Canada and Mexico, they’re also piling on new costs for American automakers — costs that the industry can scarcely afford as it scrambles to compete with cheaper (and, in some cases, higher quality) Chinese-made vehicles.
- Chinese auto brands are expected to grow their share of the global auto market to 33% by 2030, including 13% of the car market outside China.
What’s next: The White House is reportedly considering tariff relief for U.S. carmakers, but there’s no getting around the reality that if the Trump administration wants to force the industry to abandon Canada and Mexico, it’s going to have to make it pretty darn expensive to do business outside the U.S.—TS