A leading trade group representing major automakers warned on Tuesday that new 25% tariffs imposed by U.S. President Donald Trump on vehicle imports from Canada and Mexico could sharply increase prices and disrupt supply chains across North America.
“All automakers will be impacted by these tariffs on Canada and Mexico,” said John Bozzella, president of the Alliance for Automotive Innovation, which represents most major automakers in the U.S. except Tesla. The group includes General Motors, Ford Motor, Toyota, Volkswagen, Hyundai, and Stellantis.
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“Most anticipate the price of some vehicle models will increase by as much as 25%, and the negative impact on vehicle price and vehicle availability will be felt almost immediately,” Bozzella said.
The automotive industry has long relied on an integrated North American supply chain, with parts crossing borders multiple times before final assembly. Industry executives have cautioned that the tariffs could disrupt this system, making production costlier and potentially reducing vehicle availability.
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“You just can’t relocate automotive production and the supply chain overnight,” Bozzella added. “That’s the challenge and the dilemma: auto tariffs in North America could end up increasing costs on consumers before jobs come back to the country.”
Stellantis told dealers on Tuesday that it remains in discussions with the Trump administration, warning that the tariffs would impose a “cost burden” on customers. “Because the industry is highly integrated across North America, these tariffs will put Stellantis’ flagship Chrysler, Dodge, Jeep, and Ram brands at a competitive disadvantage versus Korean, Japanese, and European importers,” the company said in an email.
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Last month, Ford CEO Jim Farley also criticized the proposed tariffs, saying they would “blow a hole” in the U.S. auto industry. “What we’re seeing is a lot of cost, a lot of chaos,” he said.
Despite opposition from automakers, the United Auto Workers (UAW) union expressed support for Trumpās trade policies. “We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class,” the UAW said in a statement. “We look forward to working with the White House to shape the auto tariffs in April to benefit the working class.”
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Meanwhile, the American International Automobile Dealers Association warned that tariffs could add thousands of dollars to vehicle sticker prices, exacerbating affordability concerns amid high interest rates.
Many automakers met with U.S. Commerce Secretary Howard Lutnick last week to urge the administration to reconsider the tariff increases, but the White House has not signaled any changes to its policy.
Source: Reuters