New Tariffs Threaten to Shake the Auto Industry, Triggering Soaring Costs and Market Uncertainty

The U.S. auto industry is bracing for major disruptions as Donald Trump renews his threat to impose a 25% tariff on vehicles and parts imported from Mexico and Canada. If enacted, the tariff could cost automakers an estimated $110 million per day and up to $40 billion annually, analysts warn.

Trump announced over the weekend that the tariffs could take effect this week, but he later delayed the decision by a month following discussions with Canadian and Mexican leaders. The uncertainty has left automakers like General Motors and Volkswagen struggling to prepare for a potential financial shock.

Suppliers are already responding, with some adding “tariff fees” to invoices, a move that could push costs further down the supply chain and eventually lead to higher electric vehicle prices especially electric vehicle for American consumers. The Detroit Three—GM, Ford, and Stellantis are particularly vulnerable, with a significant portion of their North American production relying on Mexico and Canada.

Industry leaders are hesitant to make major investments in U.S. manufacturing without policy stability. “Do you invest in a new U.S. production line for a policy that might be reversed in four years—or even tomorrow?” questioned Andy Palmer, CEO of Palmer Automotive.

As automakers, suppliers, and consumers wait for clarity, the potential economic fallout of Trump’s trade war remains a pressing concern.