US President Donald Trump recently said that he is exploring possible temporary exemptions to his tariffs on imported vehicles and parts to give auto companies, which are switching to parts that were made in Canada, Mexico and other countries, more time to set up US manufacturing.
Trump announced sweeping tariffs on automotive imports in early April, imposing 25% tariffs on vehicle imports immediately and 25% tariffs on parts imports starting next month. The list of parts that will be affected includes engines, powertrains and electrical components. The levy will apply on top of other tariffs.
Under the order, cars and parts traded under the USMCA (United States–Mexico–Canada Agreement) will face a tariff on non-US parts. Analysts estimate about half the vehicles sold in the US are imported, while US-assembled cars contain around 60% foreign-sourced parts.
Ahead of the White House announcement, carmakers, suppliers, and logistics providers had been scrambling to mitigate the effects. While the industry comes to terms with what the tariff means for the automotive supply chain, the reaction is overwhelmingly one of concern and uncertainty. Original equipment manufacturers (OEMs) will be forced to absorb new costs or seek alternative sourcing strategies.
Since Trump's announcement, the stock prices of some of the biggest OEMs in the US fell across the board. As of 4 April, shares in Ford, GM, Stellantis, Rivian and Toyota Motor North America all fell on the New York Stock Exchange (NYSE). Tesla’s sales for the first quarter of the year were also down 13% globally and 5.6% in the US. Stellantis suffered a similar fate. Its sales were also down in the US by 12% year-on-year.
The American Automotive Policy Council (AAPC), which represents Ford, GM and Stellantis, said the 25% tariff on automotive imports would not only raise vehicle prices in the US but also disrupt long-term investment cycles and create more uncertainty by weakening supply chain stability and consumer confidence.
