This is why Canada and Mexico matter to auto manufacturers
Trump is on a “short hiatus”: Trade with Mexico and Canada is on the way to stability in the U.S., according to Sheinbaum
In a post on X, she said: “The tariffs are on pause for one month from now.” Sheinbaum said her government had agreed to send 10,000 national guard troops to the border to prevent drug trafficking, specifically fentanyl. And the U.S. will work to stop weapons trafficking to Mexico, she added.
Trump commented on his website that the two leaders had a good conversation and that he committed to securing the border with the US.
A 25% import tax on goods from Mexico and Canada will go into effect on Tuesday, President Donald Trump said over the weekend. Trudeau will be talking to Trump on Monday afternoon.
It would be much more expensive to import a vehicle like the Toyota Tacoma or Chrysler Pacifica from Mexico and have tariffs imposed on it. It would raise prices for vehicles assembled in the U.S. because many of their parts are imports from Canada or Mexico. A wire manufactured in the U.S. is sent to Mexico and bundled into other wires, and then sent back to the US for installation into a larger piece of a car.
The largest exporter in Mexico, for example, is the U.S. car company General Motors. Mexico is the No. 1 provider of cars and car parts for the United States. It’s the largest supplier of computer screens in the US, and one out of three of the fridges in the US comes from Mexico.
The supply network was supported by trade agreements that Trump did not like, such as the North American Free Trade Agreement. The Detroit 3, which have significant operations in the U.S.’s closest neighbors, would be particularly vulnerable to cost increases.
Bernstein Research reckons that 25% tariffs on both countries would hurt the Detroit 3 disproportionately. Analysts at Jefferies, an investment bank, project that it would add about 6%, or $2,700, to the average U.S. vehicle prices for car shoppers.
“We urge all parties to reach a swift resolution in order to provide clarity and stability for the entire U.S. auto industry,” Jennifer Safavian, President and CEO of Autos Drive America, a trade group representing international automakers, said in a statement Saturday. The Alliance for automotive innovation states that seamless trade in North America supports a $300 billion auto industry.
The MEMA wrote that the tariffs ” would have severe consequences for suppliers, workers and consumers alike.”
He told reporters on Monday that the U.S. is not dependent on Canada, and that there were no concerns about the economic impact of tariffs. “We don’t want them to make our cars,” he said.
One significant challenge for auto suppliers, dealers, and repair shops is that Trump has always said the tariffs are not intended to be permanent. That is in contrast to the tariffs on China which are meant to encourage U.S. companies to compete with Chinese competitors and to increase federal government revenue.