Which Automakers Will Be Affected by Tariffs?

It seems like "tariff" is the word of the moment. Early in his second term, President Donald Trump initially implemented 10% tariffs on goods coming in from China, with an additional 10% tariff on Chinese imports coming a few weeks later. Today, he is imposing 25% tariffs on goods imported from Mexico and Canada.

The tariffs will remain in place indefinitely at the President's discretion and may increase if other nations retaliate. There are also threats of tariffs on European imports. All of these tariffs apply to vehicles built in these three countries and to the parts imported from those countries to be used in vehicles that are assembled in the United States. The importer is responsible for paying the tariff when the item (the car, truck, SUV, or component, in this case) comes into the country. The importer, in this case a car company, could choose to absorb the cost of the tariff, but the cost will likely be passed through to consumers in the form of higher car prices.

Some car companies will feel more effects from the tariffs than others, but they will all feel the pinch. "All manufacturers are going to be impacted — even those who are building vehicles in the U.S. have some content from Canada and Mexico," said Michael Robinet, VP of forecast strategy for S&P Global Mobility. Of the Detroit Three, Ford assembles the fewest vehicles in other countries, with only 18% of its fleet coming from plants in Canada and Mexico. The remaining two members of this small club, General Motors and Stellantis (which owns Jeep, Dodge, and Ram), import about a third of their assembled vehicles from our neighbors to the north and south.

There are several auto brands that we might still think of as "foreign," but they have strong presences in North America. Honda, Kia, Mazda, Nissan, and Volkswagen all assemble vehicles in Canada and Mexico, while Volvo and its performance EV spinoff company Polestar assemble many of their vehicles in China. Four out of five Hondas built in Mexico are shipped to the U.S., and Volkswagen runs the largest automotive factory in Mexico. All of these companies will have to pay tariffs on vehicles they import from their foreign factories to sell in the U.S.