In case you’ve been living under a rock for the last few months, President Trump has announced a series of new tariffs on imported goods, including a 25-percent tariff on all cars that aren’t made in the United States. Cars built in the U.S. will supposedly avoid this tariff, however, the tax will extend to include imported vehicle components next month. As such, even “American-made” vehicles will be subject to higher pricing due to increased supply chain costs, including the popular Ford F-150 pickup truck. Now, a new video is breaking it all down.
Per an eight-minute explainer video from The Wall Street Journal, production of the F-150 depends on a supply chain of components from 24 different countries, including content from Canada, Mexico, and South Korea. GM’s products aren’t much different – check out our previous coverage to learn more about the parts content for the Buick, Cadillac, Chevrolet, and GMC model lineups.
While Trump’s goal is to encourage automakers to bolster vehicle manufacturing in the U.S., transitioning the hugely complex global supply chain to a domestic base will be no simple endeavor. As the video points out, many car parts are built using components sourced from all over the world. In fact, some components, such as transmissions, cross the U.S. border multiple times before they are finally installed in a completed vehicle.
While parts made under the U.S.-Mexico-Canada Agreement (USMCA) are currently exempt from tariffs, there is no clear plan on how these new tariffs will be applied to foreign content within those parts. Nevertheless, the proposed tariffs are expected to increase production costs significantly. Experts estimate a U.S.-made vehicle could end up costing thousands of dollars more due to new tariffs on parts and materials. This could make cars even more expensive for consumers and may result in production slowdowns as well. Additionally, some automakers may opt to invest in automation to offset the higher labor costs, which could inevitably lead to fewer jobs, even if manufacturing is shifted back to the U.S.
The auto industry is particularly vulnerable to the new taxes, given automakers have operated under free trade rules that treated North America as one big production zone for decades. Moving factories or suppliers takes years and costs huge sums of money, while testing and validating new parts made in the U.S. would take months to ensure quality and safety.
Although the United Auto Workers union supports the tariffs, saying they could bring back manufacturing jobs, automakers are asking for more clarity and stability in trade policies. Meanwhile, competition from Chinese car companies is increasing at an accelerated rate.
Check out the full video here:
Comments
And just WHO is going to spend all that time calculating the complex tariffs on each of those parts and the whole? No one, that’s who. What a nightmare.
Gee, if only GM would offer some employee pricing to the public on their cars. Doh!
Interesting fact about that video. 15 years ago, that half-shaft and alternator currently built in Mexio were produced in Southeast Michigan at Ford parts plants.