The U.S. auto industry has been bracing for impact as new tariffs imposed by President Trump on imports from Canada, Mexico, and China took effect on Tuesday at 12:01 a.m. These tariffs, expected to increase the cost of finished vehicles, engines, transmissions, and other components, come at a time when new car prices are already near record highs.
General Motors (G.M.), the largest U.S. automaker, is likely to be hit hardest. G.M. produces more vehicles in Mexico than any other manufacturer—over 842,000 in 2024, according to MarkLines. This includes key models such as the Chevrolet Equinox and Blazer SUVs, all of which are built in Mexico. Nearly half of the one million Chevrolet Silverado and GMC Sierra pickup trucks made last year also rolled off production lines in Canada and Mexico. Altogether, G.M.’s North American operations outside the U.S. accounted for nearly 40% of its total vehicle production in the region.
While Stellantis, Toyota, and Honda also manufacture about 40% of their North American vehicles in Canada and Mexico, they produce fewer vehicles than G.M., leaving them somewhat less exposed.
The Economic Fallout
Industry experts estimate that the tariffs could add $10,000 or more to the price of trucks and larger vehicles imported from Canada and Mexico. The most immediate impact is expected at border crossings, where customs agents and shippers will face delays as they adjust to new compliance requirements.
Beyond short-term disruptions, automakers will need to reassess their production strategies. G.M. is already considering increasing pickup truck production in the U.S. while shifting output from its Canadian and Mexican plants to other international markets.
Yet, automakers are cautious in their responses. Few have openly criticized the tariffs, likely due to concerns about political repercussions. The American Automotive Policy Council, which represents Detroit automakers, has called for exemptions for vehicles and parts that meet U.S.-Mexico-Canada Agreement (USMCA) content rules. Similarly, Autos Drive America, a lobbying group for foreign automakers with U.S. operations, warned that tariffs would harm American jobs, investment, and consumers.
A North American Industry in Crisis
For decades, automakers have treated North America as an integrated market, with supply chains spanning all three countries. Experts warn that disrupting this structure could lead to job losses and production cuts as manufacturers scramble to adjust. The auto industry relies on highly engineered components that require extensive testing before they can be built into vehicles, making rapid shifts in supply chains unrealistic.
Among major automakers, Ford appears least vulnerable, with 82% of its North American production based in the U.S. However, key models like the electric Mustang Mach-E and Bronco Sport are still built in Mexico. Meanwhile, Volkswagen, which relies heavily on Mexican production for its U.S. sales, has reaffirmed its commitment to free trade but faces significant exposure.
As automakers weigh their options, the tariffs threaten to drive up vehicle costs, reduce sales, and reshape the industry’s long-standing North American supply chain. With consumer prices set to rise, the biggest question remains: how much of this burden will ultimately fall on American buyers?