The automotive industry is bracing for Monday, Jan. 20, when President-elect Donald Trump is sworn in. Back in November 2024, he promised to place 25% tariffs on neighboring Canada and Mexico as one of his “many first executive orders.”
“Think about this, 70% of all the auto parts we make in Michigan go directly to our neighbors,” Michigan Gov. Gretchen Whitmer said Wednesday, Jan. 15. “Every time a Michigan auto part crosses over the border and gets taxed, those costs will be passed on to you and to consumers at the dealership. Sometimes those parts cross a couple of times throughout production.”
Whitmer is a Democratic governor in a state won by Trump in November. She told Michiganders she’s “not opposed to tariffs outright,” but that they shouldn’t be used to punish America’s closest trading partners.
Trump said the tariffs will stay in place until Mexico and Canada stop the flow of illegal immigration and drugs. Whitmer said if Trump follows through with his plans, China wins.
“They would love nothing more than to watch us cripple Americans’ auto ecosystem all by ourselves,” she said. “This is a matter of national security.”
Recently, Ford CEO Jim Farley warned, “A lot of our supply chain depends on countries from around the world, and so tariffs are really challenging for any company.”
“What a lot of people might not realize about the automotive industry is that parts cross and go back and cross and go back over the borders, especially in a state like Michigan,” Cox Automotive Executive Analyst Erin Keating told Straight Arrow News. “How do the vehicles actually get tariffed? Is it once they’re finally assembled and they come over? Is it every time a part or a piece or a car passes through the borders?
“So it will be a significant change for a lot of the automakers, especially as it goes on, the longer it goes on, and it will definitely affect consumers,” Keating added.
Keating said in anticipation of tariffs, the auto industry has been stockpiling parts ahead of the transition. Because of strategic moves like that, customers might be shielded from immediate impacts.
