Yahoo News How Trump's Proposed Tariffs Could Affect the U.S. Car Market
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President Trump has proposed a 25 percent tariff on goods imported from Canada and Mexico, two of the United States' most important trade partners.
The proposed tariff could go into effect as soon as February 1 and could impact many vehicles sold in the U.S.
Many popular models are sourced from Canada and Mexico, including the Chevy Equinox, Toyota Tacoma, Honda Civic sedan, and Honda CR-V.
Yesterday, on the second day of his second term, President Donald Trump announced his intention to impose significant tariffs on imported goods from two of the United States' biggest trade partners, Canada and Mexico. While Trump didn't specify which goods would be affected by tariffs, cars and trucks—as well as automotive parts—would likely be included, which could have widespread ramifications for the auto industry and car buyers in the U.S.
Trump was noncommittal with his statements yesterday. “We’re thinking in terms of 25 percent on Mexico and Canada,” he told the press, as reported by The New York Times. “I think we’ll do it February 1.” With a significant number of vehicles on American roads built in Mexico or Canada, a 25 percent tariff could have a huge impact on new-car prices and, in some cases, could lead to the discontinuation of models if higher prices lead to a significant drop in demand. Along with higher vehicle prices, the tariffs could affect automotive parts and disrupt supply chains, affecting vehicles assembled in the U.S. and potentially leading to job losses for American workers.
What Cars Might Be Affected
American automakers are the biggest players in terms of assembling cars north and south of our borders. General Motors heavily relies on its plant in Ramos Arizpe, Mexico, for its transition to EVs. The facility builds the Chevy Blazer EV and Equinox EV—along with the Honda Prologue—and is beginning to produce the 2025 Cadillac Optiq. The gas-powered Chevy Blazer is also built there.
GM's San Luis Potosí plant in central Mexico is arguably more crucial, churning out the Chevy Equinox and its GMC Terrain sibling. The Equinox was Chevy's second bestselling vehicle last year after the Silverado pickup, registering 207,730 sales. The Silverado could also be affected, with a portion of the 560,264 trucks sold in 2024 emerging from GM's factory in Silao. The Silverado is built in three other plants, but one of those is in Oshawa, Ontario. Tariffs could put a bigger burden onto GM's Indiana and Michigan assembly lines for the Silverado.
Some of Ford's popular and affordable models hail from Mexico, notably the Bronco Sport and Maverick, which are built at a plant in Hermosillo. The Mustang Mach-E—which had its best year yet in 2024 with 51,745 sales—rolls out of Cuautitlán Izcalli. The Mach-E is also assembled in China, but in terms of tariffs on imported goods, that's an even worse alternative. Ford won't be as hurt by tariffs on Canada—the Oakville plant is currently idled and those willing to plunk down well over $300K on a Mustang GTD, hand-built by Multimatic in Ontario, can likely find room in their budget to cover a price hike.
Stellantis—which owns American brands Ram, Dodge, and Chrysler—sources many vehicles from Canada. The Windsor Assembly Plant in Ontario churns out the Chrysler Pacifica and related Voyager—the only models keeping the storied brand alive—as well as the Dodge Charger. Mexico is also crucial for Stellantis, with Ram HD pickups and ProMaster vans built in Saltillo. The Jeep Compass and recently launched Wagoneer S electric SUV are sourced from Toluca.
It's Not Just Domestic Automakers
Plenty of other car companies are heavily invested in Mexico and Canada to supply vehicles for the U.S. market. Toyota, for example, sources its U.S.-bound Lexus RX and NX SUVs from Cambridge, Ontario, and nonhybrid Toyota RAV4 SUVs—of which Toyota sold nearly 235,000 last year—from Woodstock, Ontario. The popular Toyota Tacoma is also exclusively built in two separate factories in Mexico.
Honda is another foreign automaker that would be affected, with every Civic sedan emerging from Alliston, Ontario, and CR-V assembly split between Indiana, Ohio, and Alliston. The subcompact HR-V, which moved 151,468 units in 2024, comes out of a factory in Celaya, Mexico. Mazda's most affordable models are built south of the border, with the majority of U.S.-market Mazda 3 and CX-30 vehicles coming out of Salamanca. Nissan also cranks out low-priced vehicles in Mexico, with its Aguascalientes factory producing the Kicks, Versa, and Sentra.
Several luxury vehicles are also assembled in Mexico, including the Infiniti QX50 and QX55, the Mercedes-Benz GLB-class, the Audi Q5, and the BMW 2-series coupe. Volkswagen also exports the Taos, Tiguan, and Jetta from its facility in Puebla. It's still unclear if Trump will actually implement the tariffs starting on February 1, and what form the tariffs may take, but a tariff on automobiles produced in Mexico and Canada would lead to vast and potentially detrimental changes to the U.S. car market.
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