President Trump has threatened 25% tariffs on vehicles from Canada and Mexico unless they agree to US demands on immigration and drug trafficking. This has sparked anxiety in the auto industry, which relies on a complex, integrated supply chain spanning North America. Tariffs would raise costs for vehicles assembled in the US, as many parts originate from Canada or Mexico. The Detroit 3 automakers, with significant operations in both countries, would be particularly vulnerable.
A car hauler carries Toyota RAV4 vehicles as it enters to cross the Ambassador Bridge in Windsor, Ontario to go to Detroit, Michigan on February 3.
Tariffs would, of course, sharply raise costs on vehicles imported from Mexico, like the Toyota Tacoma, or Canada, like the Chrysler Pacifica. But it would also raise prices for vehicles that are assembled in the U.S., because many of their parts are sourced from companies in Canada or Mexico. Some parts cross borders multiple times — like, say, a wire that is manufactured in the U.S., sent to Mexico to be bundled into a group of wires, and then back to the U.S.
"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, the group representing U.S. auto manufacturing, noted that"seamless" trade in North America supports a $300 billion auto industry.
But he also dismissed concerns about the economic impacts if tariffs were imposed, telling reporters on Monday that the U.S. is not reliant on Canada."We don't need them to make our cars," he said.
TARIFFS AUTOMOBILE INDUSTRY TRADE CANADA MEXICO
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