Trump's tariffs rattle Auto industry, global backlash grows

Shafaq News/ A wave of presidential trade moves, including new tariffs on key imports, has unsettled US automakers since President Donald Trump returned to the White House last month.

While some threats, such as a proposed 25% tax on imports from Mexico and Canada, were suspended, Trump's broad offensive against the global trade system is driving up costs, industry experts say.

A 10% levy on Chinese imports, a key source of auto parts, has already been imposed. A 25% duty on steel and aluminum imports, set to take effect on March 12, is expected to further strain supply chains and increase manufacturing costs.

"It's like a little here, a little there... but it won't be little overall," Ford CEO Jim Farley said this week.

On Thursday, Trump signed plans for sweeping "reciprocal" trade measures targeting foreign partners. He highlighted the disparity in auto import taxes as a key example, noting that the European Union imposes a 10% duty on imported cars compared to the 2.5% charged by the US.

The next day, Trump said he plans to announce additional measures on foreign cars in early April, though he did not specify the rates or the countries affected.

If the suspended duties on Mexico and Canada are ultimately imposed, they would "gut" the integrated North American auto industry established under the 1990s NAFTA agreement, Farley said.

"Most people recognize the risk, but they don't expect it to cause a major shock," said Charlie Chesbrough, senior economist at Cox Automotive.

Foreign automakers with extensive operations in Mexico and Canada are also on alert. Honda, for example, has factories in all three countries, and according to consultancy GlobalData, none of the cars it sold in the US in 2024 were imported from Japan.

Officials in the Trump administration view these measures as both a source of revenue and an incentive for global manufacturers to expand production in the US.

Trump has made such trade actions central to his "America First" agenda, arguing they correct what he calls "unfair" practices by allies.

"Reducing import duties on US cars might be a relatively painless concession for Brussels," said Jeff Schuster, vice president of global research at GlobalData. "American vehicles, especially popular ones here, don't sell well in Europe, so removing duties would have little impact."

He added, "As global companies, it's inefficient to have different strategies for every market."

The administration's trade moves come as it rolls back electric vehicle incentives, putting the US at odds with Europe, China, and other major markets.

Countries subjected to these measures have condemned the actions, describing them as protectionist and harmful to global trade. Several governments, including China and the European Union, have vowed to retaliate with countermeasures, raising concerns about an escalating trade war.