Uncertainty Grows as Trump Moves Forward With Tariffs
President Donald Trump has announced plans to enact new automotive tariffs “around April 2,” adding another layer of uncertainty for automakers and suppliers already contending with steel, aluminum, and country-specific import duties.
Trump’s comments, made during an executive order signing on Friday, did not specify the affected countries or the tariff percentages. Initially planned for April 1, he stated the delay was due to being “a little superstitious” about the date.
For the U.S. automotive supply chain, the move compounds existing challenges. The industry has already been bracing for a 25% tariff on steel and aluminum imports, signed into law earlier this month. Additionally, a separate 25% tariff on imports from Mexico and Canada—set to take effect on March 4—has executives deeply concerned about rising production costs and supply disruptions.
Automakers and Suppliers Face Tough Decisions
Automakers and parts manufacturers have been working to mitigate the impact of escalating trade restrictions, but with multiple tariffs coming into play, cost pressures are mounting. Many companies, including Ford, rely heavily on North American production networks, where Mexico and Canada serve as key manufacturing hubs.
According to International Trade Administration data, 76% of Mexico’s 3.5 million annual vehicle production is exported to the U.S., while Canada ships 93% of its domestically manufactured vehicles south of the border. Ford, for instance, built over 220,000 vehicles in Mexico and nearly 55,000 in Canada through Q3 2024. A tariff on these imports could force automakers to reevaluate sourcing strategies and potentially pass costs onto consumers.
Ford CEO Jim Farley recently warned that the Mexico and Canada tariffs alone would “blow a hole” in the U.S. auto industry, making production costlier and disrupting supply chains that have taken decades to develop.
Navigating the Road Ahead
With new trade restrictions looming, procurement and supply chain leaders will need to reassess supplier relationships, pricing models, and production strategies. Diversification of sourcing, closer monitoring of tariff policies, and proactive contract renegotiations will be essential to maintaining competitiveness.
Trump’s broader push for “reciprocal tariffs” on all trading partners and his administration’s trade policy review, due by April 1, suggest further disruptions may be on the horizon. For now, automakers and suppliers must prepare for heightened volatility and consider alternative supply chain strategies to absorb potential shocks.
