- Roughly 22% of all new cars sold in the US last year were produced in Mexico or Canada.
- Starting February 4, Canadian and Mexican imports will be hit with hefty 25% tariffs.
- Some brands are already thinking about moving production to the US.
President Donald Trump’s tariffs against Canada, Mexico, and China, could cost the American car industry upwards of $33 billion, analysts predict. Lower-income consumers are expected to feel the brunt of these tariffs and a trade war has the potential to jack up prices and increase the cost of living.
Starting February 4, imports from Canada and Mexico will be hit with 25% tariffs, while goods imported from China will be slapped with a 10% tariff. The impact of these tariffs on the auto industry will be significant. Approximately 27% of all imports from Mexico between January and November 2024 were cars and car parts, while 12% of Canadian imports were cars and parts.
Read: China, Canada And Mexico Get Hit By Trump Tariffs, Sparking New Trade War
Anindya Das from Nomura Securities has suggested the tariffs between the three countries will lower operating profits in the US by $33 billion. No less than 22% of all new vehicles sold in the US last year were produced in Mexico or Canada.
According to Nikkei Asia, approximately 27% of all Nissan models sold in the US come from Mexico and roughly 13% of Hondas sold across the country are imported over the Southern border. However, not just foreign-built cars will be impacted by the tariffs.
The United States imports roughly 60% of all its oil from Canada. Additionally, the Great White North accounted for approximately 40% of minerals and metals imported to the United States by value in 2023.
“Tariffs, like a consumption tax, are regressive, so their impact is heavier on lower-income consumers,” Mitsui & Co USA president Sayu Ueno said.
Some foreign car manufacturers are already considering moving more production to the US to avoid the tariffs. According to a recent report out of Germany, both Porsche and Audi may shift some production stateside. Both car manufacturers are looking at potentially building their models at VW’s facility in Chattanooga, Tennessee, which currently builds the Atlas and ID.4. There’s also a chance Audi could build cars at the South Carolina plant which is currently under construction for the Scout brand.
