US President Donald Trump announced on Wednesday the imposition of tariffs of up to 25% on auto imports.
“What we’re going to implement is a 25% tariff on all cars not made in the United States,” Trump declared from the Oval Office at the White House.
He added that with the auto tariffs, “We started with a base of 2.5%, which is where it is now, and we went up to 25%.” According to reports, the new measures take effect on April 2, but they will not be collected until April 3.
Hours before the announcement, White House press secretary Karoline Leavitt confirmed that Trump would sign the Executive Order for the auto industry tariffs. News of the impending tariff announcement caused immediate turmoil in the financial markets. The S&P 500 fell 0.8%, dragging down a quarter that is already shaping up to be the worst since 2023. The Dow Jones fell 0.49% to 42,379 points, and a Bloomberg mega-cap index lost 2.3%. The Russell 2000, which groups small and medium-sized companies, fell 0.7%.
What does this measure mean for Mexico and Canada?
Trump’s decision represents an escalation in trade tensions with two of the United States’ most important partners: Mexico and Canada. Until now, vehicles meeting the requirements of the United States-Mexico-Canada Agreement (USMCA) were allowed into the country duty-free. This exemption — originally granted to prevent supply chain disruptions — is set to expire on April 2, the date Trump has vowed to declare his so-called “Liberation Day” with a broader round of reciprocal tariffs.
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Which U.S. companies manufacture cars in Mexico?
Mexico plays a key role in the production of vehicles sold in the United States. In 2024, 3.4 million cars were produced in Mexico, with nearly 80% exported to the U.S., according to INEGI data.
Here are the American automakers with operations in Mexico:
- General Motors: 714,000 units manufactured in 2024.
- Ford: With plants in Hermosillo and Cuautitlán, assembled 358,000 units.
- Stellantis (maker of brands like Jeep and Dodge): 314,272 vehicles produced.
How much will cars cost with tariffs?
One of the most immediate impacts will be on the American consumer’s wallet. According to Michigan-based Anderson Economic Group, the cost of producing a vehicle at U.S. plants could rise by $3,500 to $12,000 dollars per unit. This increase would depend on the type of vehicle, its supply chain, and the share of foreign components.
Even if tariffs apply only to finished vehicles and not auto parts, the result would still be a widespread increase in prices. Models assembled in Mexico such as the Chevrolet Blazer, the Honda HR-V, or certain versions of the Ram Heavy Duty and Chevrolet Silverado could be priced out of the market due to lack of competitiveness. “Some models can only remain profitable if they are assembled using lower-cost Mexican labor,” industry analysts warn.
Are there truly American-made cars?
Despite Trump’s efforts to promote “Made in America,” the reality is that there is no such thing as a 100% American-made car. Under current trade laws, parts made in the U.S. and Canada are both considered “domestic content.” Even with that broader definition, no model exceeds 75% domestic content.
The only vehicles that reach that threshold are the Tesla Model 3 and the Honda Ridgeline, the latter assembled in Alabama. Even the iconic Ford F-150, the best-selling vehicle in the U.S. for over 40 years, contains only about 45% U.S. or Canadian content.
