Trump’s Tariffs Could Cost U.S. Auto Industry $33 Billion, Analysts Warn

Trump’s Tariffs Could Cost U.S. Auto Industry $33 Billion, Analysts Warn

The tariffs imposed by former President Donald Trump on Canada, Mexico, and China could have a significant financial impact on the U.S. automotive industry, with losses estimated to exceed $33 billion, according to analysts. These tariffs are expected to disproportionately affect lower-income consumers, as rising costs could drive up vehicle prices and contribute to an overall increase in the cost of living.

Beginning February 4, imports from Canada and Mexico will be subjected to a 25% tariff, while goods arriving from China will face a 10% tariff. The consequences for the automotive sector are expected to be substantial. Between January and November 2024, approximately 27% of all imports from Mexico consisted of automobiles and auto components, while 12% of imports from Canada were related to the auto industry.

Analyst Anindya Das from Nomura Securities estimates that the trade restrictions among these three nations will result in a $33 billion decline in operating profits for U.S. automakers. Furthermore, nearly 22% of all new cars sold in the United States last year were manufactured in either Mexico or Canada, emphasizing the industry’s reliance on cross-border trade.

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According to a report from Nikkei Asia, nearly 27% of Nissan vehicles sold in the U.S. are imported from Mexico, while roughly 13% of Honda models come from the same source. However, the tariffs will not only affect foreign-manufactured vehicles.

The U.S. also heavily depends on Canada for essential resources. Around 60% of the country’s imported oil originates from Canada, along with approximately 40% of its mineral and metal imports by value in 2023.

Mitsui & Co USA President Sayu Ueno highlighted the economic burden on consumers, stating, “Tariffs function similarly to a consumption tax, placing a greater strain on lower-income individuals.”

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In response to the tariffs, several international carmakers are considering shifting more production to the U.S. Reports from Germany suggest that Porsche and Audi are evaluating the possibility of assembling vehicles at Volkswagen’s Chattanooga, Tennessee, plant, which currently produces the Atlas and ID.4 models. Audi may also utilize a South Carolina facility under development for the Scout brand, further emphasizing the impact of these trade policies on global automotive strategies.


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