logo
Here's What Trump's Tariffs Could Do to the U.S. Auto Industry

Here's What Trump's Tariffs Could Do to the U.S. Auto Industry

Yahoo04-04-2025

Announcing a barrage of new tariffs on the White House lawn yesterday, Donald Trump promised that jobs and factories 'will come roaring back into our country.' He paid special attention to the 20 or so autoworkers in the audience. 'The autoworkers were fantastic,' he said. 'You're going to be very happy soon.' At one point during the speech, Trump pulled one of his trademark red Make America Great Again hats from the dais. 'Come here. Thank you, fellas. Get it. That's it. That's it,' he said, offering them the cap.
What else they'll get from the administration besides that isn't clear. As markets reel from Wednesday's tariff announcements, the U.S. auto industry is continuing to figure out its next steps. Roughly 46 percent of vehicles sold here last year were made in other countries. Investment analysts at Bernstein Research estimate that 57 percent of the parts that make up vehicles assembled in the United States are sourced abroad; those items are due to face tariffs by May 3. GM—which imports 48 percent of the vehicles it sells in the U.S., and sources less than 40 percent of its parts domestically—could face a 79 percent drop in earnings before interest and taxes, Bernstein estimates.
Automakers had lobbied to exempt vehicles made in Mexico and Canada that comply with the terms of the U.S.-Mexico-Canada Agreement, or USMCA. The Trump administration is subjecting them to the 25 percent tariff anyway. The value of U.S.-made parts included in those cars will be deducted from the total amount that gets assessed, however. For example: A car made in Mexico that costs $40,000 would be subject to a $10,000 levy if it's shipped to the U.S. If that car contains $5,000 worth of U.S.-made parts, it'd be charged $8,750—i.e., 25 percent of $35,000.
Trump has argued that auto tariffs will compel companies to bring production back into the U.S. The United Auto Workers—while critical of Trump's action on other fronts—has enthusiastically endorsed his auto import tariffs on those grounds. 'With these tariffs, thousands of good-paying blue collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants,' the union wrote in a statement responding to the auto tariff announcement last week.
The reality may be more complicated, especially given the extent to which U.S. automakers have structured production around the expectation of free trade with Mexico and Canada. 'There is some wiggle room for certain products, but that still costs a lot of money and time,' says Stephanie Brinley, associate director of AutoIntelligence at S&P Global Mobility. The easiest places to shift production will be for models that are already produced at plants in Mexico or Canada and the U.S. The Chevrolet Silverado, for instance, is made at two plants in the U.S. and one each in Mexico and Canada. On Thursday, GM announced that it will add as many as 250 jobs to increase production at an Indiana plant that makes the Silverado and GMC Sierra trucks.
Other news has been less promising. Stellantis, which owns Dodge, Jeep, and Chrysler, has announced that it will temporarily lay off 900 employees in the U.S., including workers at two plants that provide parts to factories it's idling in Mexico and Canada as a result of the tariffs.
'Most automakers are running at a pretty good capacity rate in the U.S., so the opportunity to move things around is small,' Brinley added, emphasizing that most automakers had yet to announce major production decisions. 'This notion that you can pick up a piece of machinery and drive it up north is not even close' to reality, she said. 'To make a meaningful move is going to take a year, year and a half. And that's just if you're talking about duplicating production. If you're talking about a new plant, that's three years.'
Where any new domestic production spurred on by these tariffs takes place will depend on factors ranging from local economic incentives to how quickly certain plants are able to be retooled, and how close certain parts—often produced by third parties—should be made to assembly plants. Considering that nonunion car factories now outproduce the Big Three unionized legacy U.S. automakers, much of that work could go to workers who aren't represented by unions, in right-to-work states like Alabama and Kentucky. As the Trump administration continues its attempts to undermine the National Labor Relations Board, organizing those shops could become much more difficult.
Increasing production at existing plants and building new ones, moreover, represent big corporate commitments. Those generally require a high level of certainty about what policies will be in place over the coming months and years. The Trump administration, by contrast, has announced and rolled back tariffs at a rapid clip, maximizing chaos. Although some automakers, like Ford, have said they'll lower prices in response to tariffs, manufacturers are likely to pass at least some of the cost of tariffs on to consumers, adding potentially thousands of dollars to the cost of new cars. Autotrader predicts that the cost of new foreign cars currently priced at less than $40,000 could increase by as much as $6,000. Higher prices are likely to lead to lower sales, and the prospect of a recession—heightened by stock market turmoil this week after the 'Liberation Day' announcements—could make companies and investors wary of spending billions of dollars responding to tariffs that might not exist in a month or a year. That might also make them less willing to invest in lines of business where they've so far struggled to earn profits, including electric vehicles. 'Think about a world where we're spending billions in capital, and then it ends. We can't be whipsawing the business back and forth,' GM CFO Paul Jacobson told investors in February when discussing the tariff prospect.
An economic downturn in the U.S. may pose unique risks to Ford and GM, which sell the vast majority of their vehicles domestically. During the last financial crisis—when the government bailed out and briefly took ownership stakes in GM and Chrysler, now owned by Stellantis—foreign markets buoyed declining sales in the U.S. Since that time, legacy U.S. automakers have largely stopped selling compacts and sedans and have withdrawn from international markets; in December, GM announced that it was writing down the value of its business in China by more than $5 billion amid mounting losses there to Chinese companies such as BYD. That U.S. automakers' sales are so heavily concentrated around selling trucks and SUVs in the U.S. could make them less nimble this time around, especially if penny-pinching consumers opt for smaller, cheaper vehicles now made primarily by foreign automakers. As happened during the recession too, automakers are liable to use any pressure on their bottom lines as an excuse to lay off more workers in the name of efficiency, undermining wages and working conditions.
'If North America has a downturn—or if the U.S. has a downturn—they don't have another market as strong as this one to offset' losses here, Brinkley said. 'If that market is struggling, it'll have a different kind of an impact' than in 2008. There's no way of knowing what exactly the future holds, either for the U.S. auto sector or the economy as a whole, of course. While some are optimistic that Trump's tariffs will rebound in autoworkers' favor, the next few months will almost certainly find the industry wading through uncharted, potentially dangerous waters.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Protests Spread Beyond Los Angeles over Immigration Raids
Protests Spread Beyond Los Angeles over Immigration Raids

Yahoo

time23 minutes ago

  • Yahoo

Protests Spread Beyond Los Angeles over Immigration Raids

Police officers tackle and drag a protestor during a rainy anti-ICE demonstration in New York. Credit - Madison Swart/ Hans Lucas — AFP via Getty Images Anti-ICE demonstrations are expected to spread to more cities this week after days of unrest in Los Angeles, with at least 30 new protests planned across the country in response to the Trump Administration's recent immigration raids. Additional protests have already broken out in San Francisco, Sacramento, Houston, San Antonio, Chicago and New York, where activists rallied over the weekend and into Monday in solidarity with demonstrators in Los Angeles. By Monday afternoon, organizers had scheduled demonstrations in nearly every major city, signaling a growing backlash to the Trump Administration's immigration enforcement tactics and its deployment of the National Guard in Los Angeles. Read more: Trump Suggests Arresting Gavin Newsom, Escalating Tensions Over ICE Raids The protests were sparked by a series of workplace immigration raids last week, and escalated after the arrest of David Huerta, the president of the Service Employees International Union (SEIU) of California, during a demonstration in Los Angeles on Friday. Huerta, a prominent labor and civil rights leader, was taken into federal custody and hospitalized after what ICE described as interference with a federal operation. His arrest has galvanized organized labor, with SEIU chapters announcing nationwide demonstrations in his defense and in protest of what they called a 'clear attack on our communities.' In Los Angeles, the protests have grown larger and more confrontational since Friday. Hundreds of demonstrators marched downtown and clashed with law enforcement. Some protesters set barricades in the streets, vandalized buildings, and hurled objects at law enforcement. Police fired tear gas and rubber bullets to disperse crowds, and the California Highway Patrol used flash-bang grenades to clear demonstrators after a group blocked traffic. Read more: Can the President Activate a State's National Guard? At least 150 people have been arrested in Los Angeles since the protests began, and city officials warned that further disruptions could continue throughout the week. Trump authorized the deployment of 2,000 National Guard troops to the city over the weekend, bypassing California Governor Gavin Newsom, who called the move 'a violation of state sovereignty' and signaled plans to challenge the decision in court. Trump has described protesters as 'insurrectionists' and 'professional agitators' who 'should be in jail.' A map of anti-ICE demonstrations posted by SEIU showed that events were planned in New York, Chicago, San Francisco, Washington, D.C., Philadelphia, Atlanta, Boston, Denver, Seattle, Las Vegas, New Orleans, Charlotte, Portland, St. Paul, Santa Fe, and more. Additional demonstrations may also take place, though the largest demonstrations remain centered in Los Angeles, where National Guard soldiers in tactical gear continue to patrol areas downtown. 'ICE's brutal, military-style tactics have no place in our communities,' SEIU wrote in a post on X. 'We demand safety. We demand respect. We demand David's release.' Write to Nik Popli at

Mexico's president condemns violence amid protests against ICE raids
Mexico's president condemns violence amid protests against ICE raids

Yahoo

time23 minutes ago

  • Yahoo

Mexico's president condemns violence amid protests against ICE raids

Mexican President Claudia Sheinbaum on Monday denounced acts of violence linked to widespread demonstrations in Los Angeles against the Trump administration's immigration crackdown. Speaking during her regular morning news conference, Sheinbaum called for respect for legal processes in immigration enforcement and asked U.S. officials to uphold the rule of law. 'We condemn violence wherever it comes from,' Sheinbaum said, per Reuters. The protests erupted on Friday after Immigration and Customs Enforcement conducted raids in the city and surrounding communities. Demonstrations were largely peaceful, but tensions flared Saturday and Sunday. Police have reported 42 arrests after Sunday's protests turned violent, including 19 by the California Highway Patrol, who were called to a demonstration that closed the 101 Freeway through DTLA for several hours. Local and state leaders, including California Gov. Gavin Newsom and Los Angeles Mayor Karen Bass, have criticized President Donald Trump's use of the National Guard in trying to quell anti-ICE immigration, saying the escalation in force has led and will only lead to further trouble. Newsom also announced plans to sue the Trump administration over the deployment. Trump also indicated that he would be willing to bring in the U.S. Marines if he deemed the situation warranted it. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Mom buys product she thought was U.S.-made, but warns of misleading labels
Mom buys product she thought was U.S.-made, but warns of misleading labels

Yahoo

time23 minutes ago

  • Yahoo

Mom buys product she thought was U.S.-made, but warns of misleading labels

As President Trump's trade war continues, some consumers are searching for products made in the U.S. When Mary Schubart set out to buy bedding for her twins heading off to college, she was looking for products that were safe, provided comfort and, if possible, she wanted to buy American-made. "I like the idea of buying to support the local economy, but my overriding concern was safer," Schubart said. Schubart said she thought she found the perfect mattress pads from Pottery Barn Teen. It was advertised online as "crafted in the USA," but when they arrived, she was surprised to see one of the tags read "made in China." "I knew it is one of the countries that has less stringent regulations pertaining to health and pertaining to final product production, so I was disappointed," she said. Schubart reported her findings to Truth in Advertising, a nonprofit watchdog group that investigates when companies make false claims. Laura Smith, the Truth in Advertising legal director, said they had already flagged false claims by Pottery Barn Teen to the Federal Trade Commission. "We had found 800-plus examples of products marketed as 'made in the USA' or 'crafted in America' when they were actually imported," Smith said, of the merchandise found on seven William Sonoma websites in 2019. Schubart's complaint led to the largest "Made in the USA" civil penalty in history, with more than $3 million against Williams Sonoma, the parent company of Pottery Barn Teen. In a statement, Williams Sonoma apologized for what it called an "administrative mistake," saying, "Last year, we received an FTC fine due to an unintentional administrative mistake associated with the online product descriptions of seven items we sell. We are deeply sorry for any confusion that may have been caused by the inaccurate information that was shared, and we have improved our processes to help prevent similar incidents in the future." "Civil penalties, as long as they're more than a slap on the wrist, they can have a real impact. But it needs to be a fine that's big enough to hurt," Smith said. What qualifies as "Made in the USA?" The Federal Trade Commission requires that products advertised as "Made in the USA" be all or virtually all manufactured domestically. Plus, the ingredients or components must be made and sourced in the United States, which is the issue in a current lawsuit against Reynolds Aluminum foil for its "Made in the USA" label. The suit claims the product's key raw material, Bauxite, is not mined in the U.S. Reynolds says the claims have no merit and it will defend the case. How to know if a product is American-made Amid Mr. Trump's tariffs on certain products, some companies have said they plan to invest more in U.S. manufacturing. To verify if a product is "Made in the USA," check the label for that exact wording. Beware of qualifying language like "Assembled in the USA" or "with imported parts." If you're unsure, consumers can verify with the brand by going to its website or calling directly. Australian reporter covering Los Angeles protests shot with rubber bullet by police officer Kristi Noem says "we are not going to let a repeat of 2020 happen" amid L.A. crackdown Magic in the dark: The fantastical worlds of Lightwire Theater

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store