As automotive supply chains across North America (and the world) come to terms with Trump’s current and upcoming tariffs and how to navigate them by restructuring their supply networks, the potential impact on vehicle sales and production volumes is beginning to sink in.

While a lot can still change – and has done multiple times since “Liberation Day” – the first estimates of damage to the automotive industry in North America have now been calculated.

USMCA tariffs trade

Source: AI generated

The Center for Automotive Research (CAR) has published a new study which found Trump’s 25% tariff on vehicle imports could cost US carmakers $108 billion within the year, and impact volume production by 17.7 million units.

The Detroit Big Three – Ford, GM and Stellantis – are expected to see increased costs of $42 billion and impact production volume by 6.8 million vehicles, according to the CAR study.

Breakdown of tariffs, tariff stacking and USMCA compliance

Automotive Logistics understands* that these are the stackable tariffs facing the automotive industry affecting vehicle imports from Canada and Mexico:

  • 25% tariff on all imported vehicles
  • 25% tariff on all imported goods to the US (Also referred to as the International Emergency Economic Powers Act tariff, or IEEPA tariff, or fentanyl tariff), which is stacked onto the vehicle tariff, equalling 50% total tariff
  • If non-compliant with USMCA rules, additional 2.5% tariff stacked on top of the IEEPA 25% tariff, and 25% vehicle tariff equalling 52.5% in total
  • If USMCA-compliant, 25% auto import tariff still applies

*At time of publishing

The CAR said that estimating tariff impacts on domestically produced vehicles is not a straight-forward endeavour, since all US-produced vehicles have foreign parts content ranging between 20% to 91%, according to data from American Automobile Labeling Act (AALA).

However, the CAR added that the impact of the tariffs is actually understated in the study, due to the multiple times parts cross borders in North America before being delivered – something Automotive Logistics previously spoke about with Mike Wall, executive director, automotive analysis at S&P. At the time, he said: “Mexico trade with the US, and Canada but particularly the US, has been ingrained, it’s been entrenched over these last 20 to 25 years. We have components that cross the US-Mexico border multiple times before they get installed in a vehicle. Trade in this region is very much viewed as one region. It has been viewed as a trade bloc and sourcing has been metered out accordingly.”

Responding to the CAR’s study, the American Automotive Policy Council (AAPC), which represents the Big Three, said it intends to keep trade discussions open with the White House.

“This in-depth study by CAR demonstrates the significant cost a 25% tariff will have on the automotive industry,” said Governor Matt Blunt, president of the AAPC. “American automakers Ford, GM and Stellantis intend to maintain our ongoing dialogue with the administration to achieve our shared goal of increased US automotive production.” 

For the full tariff timeline, view our infographic here 

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Trump tariffs: A timeline of impacts on automotive logistics