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Cnn
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The Trump administration threatens a 25% rate on all imports of Canada and Mexico on Saturday – a decision that would almost be Immediate impact on dealerships and automotive factories in the United States.
Prices would add at least thousands of dollars at the cost of cars, according to experts. And not only cars assembled in these two countries and shipped to the United States, but also cars built in American car factories, which all have Canadian and Mexican parts that cannot be easily replaced.
President Donald Trump had argued on the campaign track that Prices are the only way to save the American automotive industryEven if car manufacturers declare record,, Or almost record, profits without them. But what is clear is that the prices could upset the production of vehicles across the continent and put the price of cars, already Close to Hauts recordout of reach for many buyers.
Motor factories could start slowing down – or even closing – in relatively little, Michael Robinet, vice -president of the forecasting strategy at S&P Global Mobility, said last week at CNN. Indeed, even if a car is assembled in the United States, each vehicle has parts imported from Mexico and Canada which would be subject to prices, which increases production costs. There is simply is not such that An American car.
Car manufacturers in the three countries work as a relatively unified market for years,, Due to the Alena and thereafter, the USMCA commercial transactions, while vehicles and parts were freely moved across the border, sometimes several times before the end of a car.
According to Robinet, prices have a high possibility of biases and disturbance of the automotive market in a similar way during the Pandemic COVID-19. The limited supplies of new cars for sale after COVID sent prices for new cars and even used the prices of cars.
Tap said that car manufacturers will make a cost calculation shortly after the entry into force of the prices and could decide that it is better to slow down or Even stop production in American factories rather than paying the prices imposed on their Canadian and Mexican parts. They will do so hoping that the commercial dispute will be established before the inventory of cars and trucks on their dealers is exhausted, he said.
Tap believes that slowdowns or closures could occur fairly quickly, especially in factories, car manufacturers operate in Mexico and Canada. Mexico built around 4 million vehicles last year, while Canada built 1.3 million, according to S&P data. And around 3.7 million, or around 70% of these vehicles assembled in Canada and Mexico, were shipped in exposure rooms to the United States. On the other hand, there were 10.2 million passenger vehicles built in the American assembly factories in 2024.
And it is not only Fords and herds that are projected in American automotive factories. The Subaru Outback is built in Indiana and thousands of BMW X5 SUVs come out of a plant every week in South Carolina. Mercedes SUVs are built in Alabama, and the popular Kia Telluride is built in Georgia. Almost half of the 10 million vehicles built in American car factories concern these foreign brands.
But perhaps more importantly, these 10.2 million cars that are “made in America” are all built with Mexican and Canadian parts – wire harness and relatively cheap wire fasteners with expensive motors and transmissions. The impact will therefore be felt in a short time, added tap.
And cars and their parts are not only about borders in the United States. Many of them also leave the United States because American factories ship many of their own vehicles and parts in Canada and Mexico. Mexican and Canadian authorities have threatened to slap reprisal prices on American products if the Trump administration goes ahead with its tariff threat. Thus, some cars and rooms built in American factories will not be able to go to their buyers in the north and south of the border without thousands of dollars in prices.
The United States also ships cars, parts in Canada and Mexico
The United States has sent $ 13.8 billion in cars in Canada in the first 11 months of 2024 and $ 26.5 billion in parts. He also sent $ 4.2 billion in Mexico in Mexico during the same period and $ 33.7 billion in parts.
Others do not believe that production in American factories will be assigned immediately, but should be continued long if the prices are imposed and are not quickly resolved. Some car manufacturers have probably stored the parts they need these two countries so that they can maintain production without as long as possible.
Even if they have to pay certain prices on the parts of their vehicles built in the United States, additional costs may not be paralyzing for some cheaper parts, CNN Keating, Executive Automotive Executive Analyst, told CNN. But it also does not think that the industry will decrease the prices for a long time.
“I don’t see the industry tolerated it for a very long time,” she said. “In perhaps 30 to 45 days, I could see them go to Plan B and Plan C if it is not resolved.”
She said plants in Mexico and Canada could continue to produce cars and not ship them to the United States until the situation is resolved.
All the main car manufacturers had few comments on what they will do if the prices come into force or have not responded to the request for CNN comments.
“We are not going to comment on speculation,” said Mark Giles, spokesperson for Volkswagen, who has not only a factory in Chattanooga, Tennessee, but also the largest automotive factory in Mexico.
And if production is reduced, or if shipments from Canadian or Mexican factories are put on hold, dealers will not be impatient to sell their current vehicle offer at current market prices, in anticipation that a shortage could increase Prices in the weeks and months to come, said Robinet and Ivan Drury, director of information at Edmunds.
“Currently, sales have been somewhat weak. But if the production stops, it will not take several days for the dealers to be much firmer in terms of price, ”said Drury in CNN.
The average supply of vehicles now available from American dealerships vary by 25 days for Toyota Motor, which includes Lexus, at 73 days of supply for Ford Motor, which includes its luxury brand Lincoln.
It will be important for dealerships and car manufacturers to solve this problem in March or April, Keating said. It is at this time that tax reimbursements are starting to arrive and spring a key sales period for car manufacturers.
“If we look at 45 days, we are in the tax reimbursement season. I think you will hear a lot from dealers if there is a vehicle shortage, “said Keating.
But once the prices in place, it will be car buyers – not car manufacturers, dealerships or Mexico or Canada – which will pay the thousands of dollars more for each vehicle, tap said.
“American cars buyers, Canadian car buyers, Mexican cars buyers-who pays prices,” he said. “Car manufacturers and parts suppliers are not charitable organizations. They do not absorb the cost. »»