President Donald Trump’s announcement of a 25% tariff on goods from Canada and Mexico, along with a 10% tariff on products from China, could significantly affect the global automotive sector. Automakers, who have been taking a cautious “wait-and-see” approach, will now need to activate contingency plans to manage rising costs.
The tariffs on Mexican imports are expected to have the most substantial impact on the automotive industry, followed by those on Canadian and Chinese products.
“Any tariff action must be followed with a renegotiation of the [United States-Mexico-Canada Agreement], and a full review of the corporate trade regime that has devastated the American and global working class,” said Shawn Fain, president of the United Auto Workers Union.
While major automakers like General Motors (GM) and Ford have not immediately commented on the tariffs, Honda emphasised the importance of North American auto trade for its global success.
Most leading automakers operate factories in the U.S. but rely heavily on imports from Mexico to meet consumer demand. Nearly all top-selling automakers in the U.S. have at least one plant in Mexico, which accounted for over 70% of U.S. sales in 2024.
Tariffs are taxes imposed on foreign goods entering the U.S., which could lead companies to raise vehicle prices and potentially reduce demand. The uncertainty surrounding trade has already impacted GM’s stock performance.
Analysts note that while GM’s prospects are strong, dealing with U.S. policy uncertainty is crucial. The tariffs could affect earnings for companies like GM, which has extensive manufacturing operations across North America. S&P Global Mobility warned that “virtually no automaker or supplier” in North America would be immune to these tariffs.
Wells Fargo estimates these tariffs could cost traditional Detroit automakers billions annually. S&P Global Mobility predicts that a 25% duty on a $25,000 vehicle would increase its cost by around $6,250, likely passed onto consumers.
Among those most vulnerable to these tariffs are Volkswagen, Nissan, Stellantis, GM, Ford, Honda, Toyota, and Hyundai—each with varying degrees of exposure based on their production locations relative to U.S. sales.