(Credit: Emily Forlini)
UPDATE (3/5): Trump granted a one-month tariff delay for automakers after speaking with the CEOs of Ford, General Motors, and Stellantis, CNBC reports.
The delay applies to imports from Canada and Mexico, which operate under the United States-Mexico-Canada Agreement (USMCA), which Trump negotiated during his first term as a replacement for the decades-old North American Free Trade Agreement (NAFTA). It's unclear if vehicle parts, as well as full vehicles, are covered under the temporary exemption.
“Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,” says Press Secretary Karoline Leavitt.
Original Story (3/4):
President Trump's 25% tariffs on Canada and Mexico have serious implications for car owners and buyers, especially for gas-powered vehicles.
Many top-sellers, such as the Toyota Rav-4, Honda CR-V, and Chevrolet Silverado, have plants north and south of our borders, which is why experts predict Americans could see an average $12,000 increase in car prices under the new policy, Bloomberg reports.
Many electric cars come from the US or Asia. Tesla makes the Model Y and Model 3 in the US, and they have a combined EV market share of 43%, Electrek reports. Rivian manufactures in the US, and the VW-backed Scout Motors plans to do the same. The Hyundai Ioniq 5 comes from Asia.
Electric cars also have about 30% fewer mechanical parts, leaving them less vulnerable to price increases there, Heatmap argues.
Unfortunately, EVs are still a small sliver of the industry, at around 8% of new car sales. The Trump administration also froze funding for a nationwide charging network, citing concerns about EVs raising the average vehicle cost, yet it still moved forward with the tariffs.
So, the tariffs are still set to rock the car industry, raising consumer prices and lowering margins for car companies. And not all EVs are immune: Several top sellers come from Canada and Mexico, including the Ford Mustang Mach-E. GM also manufactures the Honda Prologue, Chevrolet Equinox EV, and Cadillac Lyriq in Mexico. (Canada and Mexico have also announced retaliatory tariffs.)
Ford and GM are expecting tariffs to hit their bottom lines particularly hard. Ford CEO Jim Farley warned that these tariffs would "blow a hole in the US auto industry." GM CEO Mary Barra said the company has been mulling how to move production to the US, CNBC reports.
Trump also increased tariffs on Chinese goods, but the Biden Administration already set them at 100% for EVs, effectively barring any Chinese vehicle imports to the US.