DETROIT — The Trump administration’s announcement Saturday of 25% tariffs on goods from Canada and Mexico and 10% tariffs on products from China are expected to have far-reaching effects on the global auto industry.

For months, automakers have taken a “wait-and-see” approach to the Trump administration’s tariff threats. That waiting period is coming to an end, and automakers may need to implement advance contingency plans to try to offset the additional costs in the weeks and months ahead.

Tariffs on Mexico could have the biggest impact on the auto industry, followed by Canada and then China, depending on the automaker.

“Any tariff action must be preceded by a renegotiation of the (United States-Mexico-Canada Agreement) and a comprehensive review of the corporate trade system that has devastated the American and global working class,” UAW President Sean Fein said in a statement.

GM and other major automakers did not immediately respond to comments about the tariffs Saturday evening. Other companies, such as Ford, declined to comment, while Honda issued a broad statement: “North American auto trade is key to Honda’s global success, and we look forward to a swift resolution of this matter that will bring clarity and stability to the entire region.”

Most large automakers have plants in the United States, but they still rely heavily on imports from other countries, such as Mexico, to meet the needs of American consumers.

Almost every large automaker operating in the United States has at least one plant in Mexico, including the six largest automakers, which together account for more than 70% of total U.S. sales in 2024.

Tariffs are taxes on imports, or foreign goods entering the United States. Companies that import goods pay the tariffs, and some worry the companies will pass on any additional costs to consumers – raising the cost of vehicles and potentially reducing demand.

The formal statement provides some clarity for companies, but could cost automakers billions of dollars, many of which have been producing vehicles in Canada and Mexico tariff-free for decades.

Trade uncertainty took its toll on General Motors on Tuesday, with its shares suffering their worst day in years despite guidance for 2025 and fourth-quarter revenue and profit that beat Wall Street expectations.

“The key takeaway from GM’s fourth-quarter earnings results is that while the opportunity for GM is compelling, it must currently navigate U.S. policy uncertainty,” Barclays analyst Dan Levy said in an investor note Wednesday.

GM did not factor in potential tariffs in its guidance, with Chief Financial Officer Paul Jacobson saying the automaker was taking a “cautious” approach given tariffs have yet to be imposed on North American goods.

Both Jacobson and GM CEO Mary Barra said the company had contingency plans in place for any action, but that was not enough to calm anxious investors.

“The volatility is just too great,” Jacobson told investors Tuesday, citing issues and events such as the inauguration and the California wildfires. “With so much volatility in January, we would remain cautious until market data settles down a bit.”

‘Big impact’

The tariffs could have a big impact on the global auto industry and could reduce earnings for companies like GM that have a large manufacturing presence in North America.

“Whenever these blanket tariffs are imposed, they will have a big impact on the auto industry,” S&P Global Liquidity said in a report this week. “Almost no [automaker] or supplier operating in North America” would be immune, the report said.

Almost every major automaker operating in the U.S. has at least one plant in Mexico, including the six largest automakers that together account for more than 70% of U.S. sales in 2024.

The U.S. and Mexico have a high degree of auto industry integration, with Mexico importing 49.4% of auto parts from the U.S., while Mexico exports 86.9% of its auto parts to the U.S., according to the U.S. International Trade Administration.

Wells Fargo estimates that a 25% tariff on Mexican and Canadian imports would cost the legacy Detroit automaker billions of dollars a year. The firm estimates that tariffs of 5%, 10% and 25% would cost GM, Ford, and Chrysler parent Stellantis $13 billion, $25 billion and $56 billion, respectively.

S&P Global Mobility (formerly IHS Markit) estimates that a 25% tariff on a $25,000 car from Canada or Mexico would increase its cost by $6,250, some, if not all, of which would likely be passed on to consumers.

Automakers most at risk

Factories in Canada and Mexico produce about 5.3 million vehicles, of which about 70% (nearly 4 million) are sold to the U.S., the S&P Global Mobility report said.

Mexico accounts for the majority of those vehicles, as five automakers — Ford, GM, Stellantis, Toyota Motor and others — produce just 1.3 million light vehicles in Canada through 2024, mostly for the U.S. market, according to the Canadian Manufacturing nonprofit research group.

Some of those automakers also rely heavily on production in Mexico, but not all will face the same disruptions. German automaker Volkswagen is most at risk from tariffs in Mexico by percentage of sales, while Nissan Motor and Stellantis, according to the S&P Global Mobility report, are most at risk from tariffs.

“Obviously, we’re looking at a variety of options,” Antonio Filosa, head of Stellantis’ North American operations, said on Jan. 10. “But yes, we need to wait for his decision, and we will act accordingly after Mr. Trump and his administration make the decision.”

Based on the percentage of U.S. sales that are produced south of the border, the following automakers are most vulnerable to tariffs on Mexican imports:

Volkswagen: 43%

Nissan: 27%

Stellaris: 23%

GM: 22%

Ford: 15%

Honda: 13%

Toyota: 8%

Hyundai: 8%
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