Trump’s 100% Tariff Proposal Stirs Debate in Auto Industry

The automotive world is buzzing after former President Donald Trump reportedly suggested imposing a 100% tariff on cars imported from Mexico if he wins the upcoming presidential election.

This statement, shared by Sawyer Merritt on X, has sparked discussions about its potential impact on the U.S. auto industry and international trade agreements.

Current Auto Manufacturing Landscape

Tesla doesn’t currently produce cars in Mexico, but other major American automakers have significant operations there. In Q2 2024, 47% of Ford’s EV sales in the U.S. were from vehicles manufactured in Mexico, while GM’s figure stood at 35%. Both companies also produce many internal combustion engine (ICE) vehicles south of the border.

Tesla’s Strategic Pause

Interestingly, Elon Musk has put Tesla’s Giga Mexico factory plans on hold. During Tesla’s Q2 earnings call, Musk stated:

“We are currently paused. We need to see how things stand after the election; We are increasing capacity at our existing factories significantly.”

USMCA Complications

The United States-Mexico-Canada Agreement (USMCA), signed by Trump himself in January 2020, presents a significant hurdle to this proposed tariff.

The agreement prohibits the leverage of tariffs on a range of goods, including automobiles. Implementing such a tariff would require repealing the agreement, which would need Congressional action.

Industry and Public Reactions

The proposal has met with mixed reactions. Some, like Kevin Wright, argue that employment in the automobile industry is a “HUGE issue” and that legacy automakers and unions have stifled innovation.

Others, like Simon P, suggest that “A 100% tariff on cars from Mexico would be a huge blow to the US auto industry, and it’s hard to see how it would benefit anyone.”

EVXL’s Take

This potential tariff could seriously shake up the EV landscape. It might force companies like Ford and GM to reconsider their production strategies, potentially slowing down EV adoption in the short term. However, it could also spur increased investment in U.S.-based EV manufacturing.

In our recent coverage of Ford’s EV initiatives, we’ve seen the company’s commitment to expanding its electric lineup. This proposed tariff could accelerate Ford’s plans to boost domestic EV production, potentially leading to more affordable American-made electric vehicles in the long run.

What’s your take on this? Could this tariff proposal actually boost U.S. EV manufacturing, or is it a potential roadblock for the industry? Share your thoughts in the comments below!​​​​​​​​​​​​​​​​