New York
Cnn
–
The Trump administration is threatening a 25% fee for all imports from Canada and Mexico as soon as Saturday – an action you will almost say Immediately affect car traders and factories in the United States.
Tariffs would add a minimum of thousands of dollars to the cost of car, according to experts. And not only cars that are collected in those two countries and are sent to the United States, but also cars built on American automobile plants, all of which have Canadian and Mexican parts that cannot be easily replaced.
President Donald Trump had argued in the footsteps of the campaign that tariffs are the only way to save the American vehicle industry, even though automobiles are reporting data, Or almost-cord, profits without them. But what is clear is that tariffs can increase vehicles production across the continent and set the price of cars, already near record levels, out of reach of many buyers.
Car factories can start to slow down – or even close – relatively short, said Michael Robines, vice president of the Strategy of S&P Global Mobility, told CNN last week. This is because even if a car is collected in the United States, each vehicle has parts imported from Mexico and Canada that would be subject to tariffs, increasing production costs. There simply It is not such a thing as an all-American car.
Vehicle manufacturers in all three countries operated as a relatively unified market for years, Due to oil and then USMCA trade agreements, as vehicles and parts move freely across the border, sometimes many times before a car was completed.
Tariffs have a strong opportunity to sculpt and disrupt the car market in a way similar to the Covid-19 Pandemia, according to Robins. Limited supplies of new cars for sale after Covid sent new car prices, and even used car prices, rising.
Robines said Even stop production in American plants rather than paying the fees set in their Canadian and Mexican parts. They will do so by hoping that the trade dispute was worked before the car and truck inventory in their traders is exhausted, he said.
Robins believe that slows or closures can come quite quickly, especially in plants automobiles operating in Mexico and Canada. Mexico built about 4 million vehicles last year, while Canada built 1.3 million, according to data from S&P. And approximately 3.7 million, or about 70% of those Canadian and Mexican vehicles, were sent to the United States exhibition room. In contrast, there were 10.2 million passenger vehicles built at the US Assembly plants in 2024.
And it’s not just Fords and Chevrolets being turned on by American vehicles. Subaru Outback is built in Indiana, and thousands of BMW X5 SUVs roll from a plant each week in South Carolina. The Mercedes SUVs are built in Alabama, and the popular Kia Telluride is built in Georgia. Nearly half of the 10 million vehicles built on US vehicles are for those foreign brands.
But perhaps most importantly, those 10.2 million cars that are “made in America” are all built with Mexican and Canadian parts – from relatively inexpensive wires and fasteners to expensive engines and transmissions. The impact will feel so okay, the Robins added.
And their cars and parts are not only flowing over the borders in the United States. Many leave the United States as well, as US factories send a fair number of vehicles and their parts in Canada and Mexico. Mexican and Canadian authorities have threatened to hit revenge fees for American goods if the Trump administration goes ahead with its tariff threat. So some of the cars and parts built on American plants will not be able to reach their buyers in the north and south of the border without thousands of dollars, as well.
US sends cars, part in Canada and Mexico too
The United States sent cars worth $ 13.8 billion to Canada during the first 11 months of 2024 and $ 26.5 billion. She also sent vehicles worth $ 4.2 billion to Mexico in the same period and $ 33.7 billion.
Others do not believe that production in American plants will be touched immediately, but agree that it will not continue for a long time if tariffs are set and are not quickly resolved. Some automobiles are likely to accumulate the parts they need from those two countries so that they can keep the tariffs without the longer.
Even if they have to pay some fees in parts in their vehicles built by America, additional costs may not be damaged to some of the cheapest parts, CNN executive analyst Eri Keating, executive analyst at Cox Automotive. But she also does not think the industry will be charged in the stomach for an extended period of time.
“I don’t see the industry by tolerating it for a long time,” she said. “Within maybe 30 to 45 days, I can see them moving in plan B and Plan C if this is not being resolved on its own.”
She said plants in Mexico and Canada could continue to produce cars and simply not send them to the United States until the situation is resolved.
All the main automobiles either had little comment on what they would make if tariffs come into force or did not respond to CNN’s request for comment.
“We will not comment on speculation,” said Mark Giles, spokesperson for Volkswagen, who not only has a chattanooga factory, tenses, but also the largest car factory in Mexico.
And if the output is reduced, or if shipments from Canadian or Mexican plants are laid on, traders will not be eager to sell their current vehicle supply with current market prices, pending a shortage can increase prices In the weeks and months to come, Robinet and Ivan Drury, director of the Edmunds penetration, said.
“Right now, sales have been somewhat weak. But if production stops, it will not take many days for traders to be much more determined in prices,” Drury told CNN.
The average supply of vehicles now available to US traders ranges from 25 days for Toyota Motor, which includes Lexus, up to 73 days Ford Motor supply, which includes its luxury Lincoln brand.
It will be important for traders and automobiles to resolve this issue until March or April, Keating said. This is when tax refunds begin to reach and makes spring a major sales period for automobiles.
“If we look at 45 days, we are in the season of main tax reimbursement. I think you will hear extraordinary quantities from traders if there is a shortage of vehicles then, ”Keating said.
But once the tariffs are set, it will be car buyers – not automobiles, traders, or Mexico or Canada – who will pay thousands of dollars for each vehicle, Robinet said.
“American car buyers, Canadian car buyers, Mexican car buyers – this is the one who pays the fees,” he said. “Vehicle manufacturers and parts suppliers are not charity. They will not absorb the cost. “