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Trump Tariffs Sending Auto Industry Into Uncertainty, Analyst Says
The implementation of tariffs by the Trump administration has plunged the auto industry into uncertainty, with potential far-reaching consequences for consumers and workers alike. According to S&P Global Mobility analyst Stephanie Brinley, the situation is “one of most fluid situations the auto industry has ever seen,” with a high likelihood of higher prices and production cutbacks in 2025.
As previously reported, President Donald Trump implemented tariffs of 25% on Canadian and Mexican goods just over a month ago. Following a brief pause, the administration reinstated these tariffs, citing Canada and Mexico’s failure to adequately address drug trafficking. The impact of these duties will be felt across the entire industry, with vehicles and parts often crossing borders multiple times during production.
As a result, vehicle prices are expected to increase by $4,000 to $10,000 or even as much as $12,000, according to estimates from consultant Patrick Anderson. While Brinley did not provide specific price projections, she warned that the bulk of these costs would likely be passed on to consumers.
In addition to higher prices, the industry may also see a reduction in vehicle discounts and incentives, which could further exacerbate the situation for buyers. The analyst expects auto suppliers to struggle to absorb the increased cost, leading to reduced production levels and job losses.
S&P Global Mobility estimates that around 63,900 light vehicles are produced daily in North America. In response to the tariffs, automakers may be forced to reduce their output by approximately 20,000 vehicles per day, Brinley noted.
Brinley’s analysis also suggested that the industry may see a shift towards more localized production processes over time, with companies potentially changing their supply chains to avoid border crossings altogether. However, this would require significant investments and time, making it an unlikely short-term solution.
As for the impact of tariffs on individual companies, Brinley noted that nearly all major players in the industry have facilities in Canada and Mexico. General Motors Co., Ford Motor Co., Stellantis, Toyota Motor Corp., Honda Motor Co., and Volkswagen AG are among those affected.
While some may argue that the new duties will benefit American workers by protecting domestic industries, the United Auto Workers (UAW) union has taken a different stance. Despite opposing Trump’s 2024 presidential campaign, the UAW expressed support for the tariffs in a statement.
