North American vehicle production could fall by a third within a week following President Donald Trump’s decision to impose 25% tariffs on imports from Canada and Mexico, according to an analysis by S&P Global Mobility. The tariffs, which took effect on Tuesday, are expected to disrupt supply chains, increase production costs, and force automakers to cut shifts or idle plants.
S&P Global Mobility estimates that approximately 20,000 fewer vehicles will be produced per day due to the tariffs. North America’s auto industry manufactures about 63,900 light-duty vehicles daily, with 65% assembled in the United States, 27% in Mexico, and 8% in Canada. Automakers are now bracing for significant operational challenges, as many parts cross borders multiple times before final assembly.
“We’re going to see some plants drop shifts. We’re going to see some plants just slow build rates,” said Stephanie Brinley, associate director at S&P Global Mobility. “It won’t be necessarily consistent across automakers.”
Shares of major automakers, including Ford, General Motors, and Stellantis, fell sharply on Tuesday in response to the tariffs. Industry groups have warned that the new trade barriers will likely lead to higher vehicle prices, with the Anderson Economic Group estimating that tariffs could add up to $12,200 to the price of some models.
Automakers warn of disruption
Automakers have largely avoided direct public comments on the tariffs, instead deferring to trade associations. The American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, argued that vehicles and parts meeting the content requirements of the United States-Mexico-Canada Agreement (USMCA) should be exempt.
“Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States,” said Matt Blunt, president of the AAPC.
The Alliance for Automotive Innovation, which represents most automakers selling in the U.S., warned that no manufacturer would escape the impact of the tariffs.
“This isn’t hypothetical,” said CEO John Bozzella. “Most anticipate the price of some vehicle models will increase – by as much as 25% – and the negative impact on vehicle price and vehicle availability will be felt almost immediately.”
Nissan issued a statement expressing concern, saying that “sustained tariffs of this magnitude will have a negative impact for automotive manufacturers.”
Wall Street analysts and automotive executives have described the tariffs as injecting unnecessary chaos into the industry. Ford CEO Jim Farley previously warned that prolonged tariffs at this level could erase billions in industry profits and damage American jobs.
Supply chain impact and higher costs for consumers
The automotive industry relies on a highly integrated supply chain, with some parts crossing borders multiple times before final assembly. Tariffs add costs at each step, which are likely to be passed on to consumers. The Anderson Economic Group estimates that full-size SUVs could see price increases of up to $9,000, while small cars could rise by $6,200. Electric vehicles, which depend on Chinese-made components, may see the sharpest increases, with costs rising by as much as $12,200.
The tariffs also create uncertainty for automakers planning long-term investments. Unlike other industries, vehicle production cycles span years, requiring significant investments in plants and supply chains. Changes to trade policy disrupt these plans, making it difficult for companies to commit to new factories or products.
Industry faces tough decisions
In response to the tariffs, some automakers have accelerated production in U.S. plants while considering longer-term shifts. General Motors has already moved some vehicles into the U.S. from foreign plants, while Stellantis has urged the administration to keep Canada and Mexico tariff-free.
Trump has defended the tariffs, arguing they will bring auto manufacturing back to the U.S. “The tariffs will drive massive amounts of auto manufacturing to MICHIGAN,” he posted on social media. However, industry experts caution that relocating production is not straightforward. Moving assembly plants requires retooling facilities, securing new suppliers, and training workers—processes that can take years.
“The auto industry doesn’t operate on political timelines,” said Bill Ford, executive chairman of Ford Motor Company. “We can adjust to almost anything as long as we know what that path is, but what’s really hard for us is the constant change in policy.”
