Automakers are trying to reduce costs and consumers may delay buying new cars, resulting in a decrease in car production in North America by about one-third next week as U.S. President Donald Trump imposed 25% tariffs on Mexico and Canada, CNBC reported.
According to the latest analysis by data and forecast company S&P Global Mobility, North America lost car production could reach about 20,000 vehicles per day. If Trump’s tariffs on Canada and Mexico are not changed or cancelled, the impact on production and the possibility of layoffs will continue to increase.
The S&P Global Auto report says that the average 25 automakers produce 63,900 light passenger cars per day in North America, with most (about 65%) assembled in the United States, followed by Mexico (27%) and Canada (8%), with the impact varying by automakers, vehicle models and factory locations. The report said that tariffs may cause factories to shut down completely or reduce production of some models.
The American Automotive Policy Council (AAPC), which represents Ford Motor, General Motors and Stellantis, believes that vehicles and parts complying with the USMCA should be exempt from increased tariffs. “Our U.S. automakers invest billions in the U.S. to meet these requirements and should not be weakened by tariffs. These tariffs will increase the cost of producing vehicles in the U.S. and undermine the U.S. investment environment. Competitors outside North America, by contrast, benefit from it.”
The Alliance for Automotive Innovation warns that no automaker will be unscathed, and this (tariff) will lead to higher consumer costs. “This is not a hypothesis. All automakers will be affected by tariffs on Canada and Mexico. Many people expect some models to rise, up to 25%, and the negative impact of tariffs on vehicle prices and inventory will be felt soon,” said John Bozzella, the organization’s CEO.
In addition, digital automotive executives and Wall Street analysts believe that Trump’s tariff policy has brought unnecessary chaos to the automotive industry.