Trump Car Tariff Pivot and Detroit’s ‘Big Three’
AFP/APP
New York: After an outcry from Detroit, President Donald Trump has granted one-month tariff exemptions on most auto imports from Canada and Mexico, underscoring the continued clout of US carmakers.
The “Big Three” automakers—Ford, General Motors, and Chrysler-owner Stellantis—operate their businesses on an integrated basis throughout North America, leaving them badly exposed to the proposed tariffs.
Trump, who won hotly contested Michigan during the 2024 presidential campaign, halted the auto tariffs on Wednesday, just a day after they took effect. The announcement represents relief “but not a cure,” since the same tariffs could kick in next month, according to Bank of America.
Diminished ‘Big 3’ Still a Force
While much diminished from their heyday, General Motors, Ford, and Stellantis remain giant players in the United States in terms of jobs and economic impact.
Automakers in the US employ 436,000 workers, with the Big Three accounting for about 55% of that number.
The trio also accounts for half of the US assembly plants and nearly half of the 10 million vehicles assembled annually in the United States, according to the American Automotive Policy Council (AAPC).
By comparison, foreign automakers like Honda, BMW, and Nissan each account for 5% or less of total US auto jobs.
Tesla—led by close Trump ally Elon Musk—accounts for 14% of US auto jobs, according to the AAPC.
Integrated Throughout North America
The Big Three also produce cars in overseas factories, but most of their imports come from Mexico and Canada under the United States-Mexico-Canada Agreement (USMCA)—a free trade pact inked during Trump’s first term.
Popular vehicles imported from Mexico (2024): Chevrolet Silverado, Ford Maverick.
Popular vehicles imported from Canada (2024): Chrysler Pacifica, Lincoln Nautilus.
Foreign automakers like Toyota and Honda also utilize the USMCA to produce cars in Canada and Mexico for the US market. These companies have developed sophisticated supply chains where parts and technology move seamlessly throughout the region.
The auto supply industry employs 932,000 people across all 50 US states, according to MEMA, the Vehicle Suppliers Association.
The US industry sources about 27% of its manufacturing materials from Mexico and 10% from Canada (MEMA).
Other Car Tariffs Coming
The auto industry’s regional integration makes it one of the most exposed sectors to Trump’s hefty 25% tariffs on Mexico and Canada.
Ford CEO Jim Farley warned in February that the tariffs “would blow a hole in the US industry that we have never seen.”
While welcoming Trump’s tariff reprieve, automakers recognize it is only for one month.
The Trump administration argues that these tariffs encourage more US manufacturing, but industry experts disagree.
Jessica Caldwell (Edmunds Head of Insights): “A month is nowhere near enough time for automakers to relocate factories or reconfigure supply chains.”
Manufacturers may have to ramp up production and stockpile inventory, which is an expensive and risky move.
Trump has broadly discussed a 25% tariff on imported cars but has offered few details.
If USMCA-covered imports are protected, automakers from Germany, Japan, and South Korea that import to the US could be the most impacted.
50% of cars sold in the US are manufactured domestically. Among imports, about half come from Mexico and Canada, with Japan, South Korea, and Germany as other major suppliers.
