U.S. auto industry is in the tariff crosshairs
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Illustration: Sarah Grillo/Axios
Cars that are made in America aren't only made in America — they're made across North America.
- As a result, Trump's across-the-board tariffs on all trade with Mexico or Canada risks making U.S. autos much more expensive than foreign imports.
Why it matters: The U.S. auto industry could shut down within a week, by some estimates, thanks to these tariffs. Even if it doesn't, there is no automaker that's set up to operate in a world of high-friction North American border duties.
The big picture: With modern supply chains, a single component in a vehicle can cross the U.S. border between six and eight times before final assembly.
- Trump's order makes it clear that duty is payable every time any component crosses into the U.S. — there's no "drawback" allowed that limits the tariff to just the value added abroad.
Zoom out: What that means is that the 25% tariffs won't just be payable on full vehicles that have their final assembly in Mexico, like the Chevrolet Equinox or the Ford Maverick.
- They're also going to affect nearly all of the components in nearly all cars made in North America, often multiple times over.
- Aside from the actual tariffs themselves, there's also no infrastructure in place to even place a precise dollar value on all the components that travel back and forth, let alone fill out customs paperwork on them.
The bottom line: If you add up all the tariffs that are going to apply to U.S.-made vehicles, they could easily end up dwarfing total tariffs on finished cars imported from Europe, Japan, or Korea.
- Far from boosting the U.S. auto industry, these tariffs, if they stay in place for any length of time, could end up decimating it.
