S&P Global Mobility JAN 2025 / Read original article
US President Donald Trump is assessing a 25% tariff on all goods from Canada and Mexico. While this would impact all industries, S&P Global Mobility looks at the specific impact of Trump’s automotive tariffs on vehicle assembly.
President Trump has said the tariff could be applied as soon as Feb 1, 2025, though this timeline seems unlikely. At time of writing, the latest intelligence suggests a more measured approach may still win out, though tariffs could be applied by spring 2025.
Regardless of timing, these blanket tariffs would have a massive impact on the auto industry. It is also likely that Canada and Mexico will reciprocate through an equal or ‘representative’ tariff. Though there is no indication of what that retaliation might look like at this time, we could see another degree of complexity if these countries imposed their own tariffs on automotive components imported from the US and used in Canadian or Mexican assembly.
From a trade perspective, the move is likely to bring early changes to the USMCA trade agreement – and make those changes more favorable to the US. The USMCA trade agreement is due for review in July 2026.
There are approximately 5.3m light vehicles built in Canada and Mexico, with about 70% of these destined for the US. Further, many US-built vehicles use Canadian or Mexican-sourced propulsion systems and component sets; those components would see a tariff as well, increasing costs for vehicles produced in the US. Virtually no OEM or supplier operating under the USMCA is immune.
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