2025 Edition,  Articles,  Automotive World

Tax on Imports? Yes, in a Trump Future

February 14, 2025 /

As I’m sure most of my readers have heard by now, the President of the United States wants to impose taxes on some of the key products that are traded between Canada, Mexico, the United States, and China, and unfortunately this includes cars and car parts as well. The tariff was supposed to come into effect February 1, but after talks between Trudeau and Trump on February 3, it has been postponed until March 1. Nonetheless, if the tariff is imposed on the 3 named countries, it really will change the way things are, especially for Mexico, the United States, and Canada. 

Now although Trump claims that the United States doesn’t need things like Canadian energy or cars, this plays a bigger role in the long term speaking directly about the future of the Canadian-American relationship and even CUSMA (Canada-United States-Mexico Agreement). This article will be strictly about the impact of the tariffs on cars and car parts but trust me, this is just the beginning of a very rocky relationship down the road, and I can’t be the only one that thinks this. 

Canada, United States, and Mexico Flags – Credits: https://www.etsy.com/ca/listing/1119491857/canada-united-states-and-mexico-crossed?gpla=1&gao=1&&utm_source=google&utm_medium=cpc&utm_campaign=shopping_ca_en_ca_-other-other&utm_custom1=_k_CjwKCAiAnpy9BhAkEiwA-P8N4l2E5GXxSEPIOaMWln-i6iIj1y0nS5Kr5Ck5Byb9c4mRSRHR5u8bRhoCTT0QAvD_BwE_k_&utm_content=go_21619716876_170381789750_711062608476_aud-2080357863802:pla-360989572517_c__1119491857enca_102855400&utm_custom2=21619716876&gad_source=1&gclid=CjwKCAiAnpy9BhAkEiwA-P8N4l2E5GXxSEPIOaMWln-i6iIj1y0nS5Kr5Ck5Byb9c4mRSRHR5u8bRhoCTT0QAvD_BwE

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The word “tariff” is Donald Trump’s favourite word but what does it really mean? Well a tariff is a tax or duty that has to be paid on a particular (or specified) group of imports or exports. But as costly as this will be for Canada and Mexico it’s even more costly to the economy in all 3 countries. Automakers have been fearing and planning for this day for so long and now with China being added to this list it’s only making things worse. It was announced that China will have an additional 10% on their products and the automotive companies that come directly from this country will be affected as well. 

According to the president of the Auto Workers Union, Shawn Fain, “Any tariff action must be followed with a renegotiation of the [United States-Mexico-Canada Agreement] and a full review of the corporate trade regime that has devastated the American and global working class.” (Kristian Burt, “Tariffs are not the answer”; Industry and corporate leaders react to Trump duties on Mexico, Canada, and China, cnbc.com/2025/02/01/tariffs-are-not-the-answer-industry-and-corporate-leaders-react-to-trump-tariffs-on-Mexico-Canada-and-China, February 2, 2025). Now Canada understands this but personally I feel Trudeau’s response although seemingly effective is very childish. In retaliation, Canada added a 25% tariff on $155 billion worth of American goods. This came into effect as early as February 4th with “immediate tariffs” on $30 billion worth of goods which has the balance of $125 billion worth of American products following 3 weeks later – the only reason it wasn’t immediate as well was to give Canadian companies and supply chains enough time to find alternatives. 

Even some automakers took to the press making comments on the tariffs, with Honda issuing the following statement: “North American auto trade is key to the success of Honda globally and we look forward to a swift resolution that provides clarity and stability through the region.” (Michael Wayland, Trump’s 25% tariffs on Mexico and Canada to challenge the global auto industry, https://www.cnbc.com/2025/01/31/trumps-25percent-tariffs-this-is-whats-at-stake-for-us-auto-industry.html, February 2, 2025). 

Honda Company Logo – Credits: https://foundation.mozilla.org/en/privacynotincluded/honda/

Many of the major automakers around the world have plants in the United States but the U.S. still relies heavily on imports from other countries – including Mexico and China – to meet the growing demands of their consumers. Plus almost every major automaker that has a plant in the United States has at least one factory in Mexico, which includes the top 6 selling automakers that accounted for over 70% of U.S. sales in 2024.

The Car Companies that Might Be Affected – And It’s Not Just Domestic Brands

  • General Motors – GM relies heavily on their plants in Mexico especially when it comes to their Electric Vehicles
    • (Ramos Arizpe) – This factory builds models like the Electric (and gas powered) Chevy Blazer, Electric Equinox, and was set to produce the 2025 Cadillac Optiq 
    • (San Luis Potosí) – This factory builds models like the gas powered Chevy Equinox and the GMC Terrain 
    • (Silao, Mexico, Indiana, United States, and Michigan, United States) – These factories build the Silverado which has the possibility to be affected too 
  • Ford – Ford has assembly plants in Mexico and has ties to China for some of the parts that are needed in their cars
    • (Hermosillo) – This factory builds models like the Bronco Sport and Maverick 
    • (Cuautitlán Izcalli) – This factory builds models like the Mustang Mach-E which also is assembled in China 
    • (Oakville, Ontario) – This factory is currently idled but is set to produce the Mustang-GTD – hand built by Mutlimatic in Ontario 
  • Stellantis – Who owns American brands like Ram, Dodge, and Chrysler – sources many of their vehicles from Canada
    • (Windsor, Ontario) – This factory builds the Chrysler Pacifica, Voyager, and the Dodge Charger 
    • (Satillo, Mexico) – This factory builds the Ram HD pickups and ProMaster vans 
    • (Toluca, Mexico) – This factory builds the Jeep Compass and the Wagoneer S Electric SUV 
  • Toyota’s U.S brand Lexus – The NX and RX SUV’s are built in Cambridge, Ontario, Canada 
  • Toyota – Toyota has plants in Mexico and Canada
    • (Baja California and Guanajuato) – Exclusively builds the Tacoma 
    • (Woodstock, Ontario) – This factory builds the nonhybrid version of the RAV4 SUV’s 
  • Honda – Although a foreign car maker, Honda has factories in Canada, the United States, and Mexico
    • (Alliston, Ontario) – This factory builds every Civic Sedan that Honda sells 
    • (Alliston, Ontario, Ohio, United States, and Indiana, United States) – These factories split the production of the CRV 
    • (Celaya, Mexico) – This factory newly started producing the subcompact HRV 
  • Mazda – Mazda’s more affordable cars are built south of the border with majority of the cars being sold in the United States market coming out of Mexico
    • (Salamanca, Mexico) – This factory builds the Mazda 3 and the CX-30
    • (Aguascalientes, Mexico) – This factory builds the Kicks, Versa, and Sentra 
  • Luxury vehicles that are built in Mexico plants
    • Infiniti QX50 and QX55 
    • Mercedes Benz GLB class 
    • Audi Q5
    • BMW 2 Series Coupe 
    • Volkswagen also exports the Taos, Tiguan, and Jetta from it’s facility in Puebla, Mexico  

Remember What Happened Last Time?

Imposing tariffs is not something Donald Trump is new too – this was something he had done the last time he was in office, during his first term actually, but instead of imposing them on a wide range of products it was limited to softwood lumber (20%), steel (25%), and a 10% tax on aluminium products. 

Tariffs – Credits: https://www.pwsc.com/builders-2018s-steel-aluminum-tariffs/

Now Canada retaliated back then too – imposing their own tariffs on roughly $16.6 billion worth of steel, aluminum, and other exported products to the United States which included things like coffee, syrup, shaving products, and even ketchup believe it or not. Keep in mind this was when the NAFTA trade agreement was still in existence (and referred to as this) – an agreement that Donald Trump wasn’t too big of a fan (surprise, surprise). 

Fast forward a couple of months to October 2018 and CUSMA (or USMCA as they call it in the United States) was born, however, it did take another 7 months (so now we are in May 2019) for the agreement to be reached on both sides to lift the tariffs. 

History will show you before Donald Trump – and I’m sure many of you would agree there were a bunch of other Presidents and Prime Ministers that ruined these countries – Canada, the United States, and Mexico actually lived peacefully with one another for a while. Sure there were small hiccups (if you will) but nothing as significant as the recent events that have been occurring. And even the economy would agree! 

Prior to all of the drama that was happening on both sides of the border with the aluminium and steel products being taxed, the United States actually saw significant growth in these sectors with steel up 22.6% in the 4 months prior to the imposition and aluminium rising 12.5% from February to May 2018. But when the tariffs were imposed, those numbers dropped like hotcakes – steel fell 37.8% in June and aluminium saw an average monthly export value of 18.6% during the tariff period compared to 2017. 

To find out more on what happened the last time Trump imposed tariffs on Canadian goods, please visit the Global News article linked here.

Final Thoughts

This is a developing story so make sure to keep up to date with the latest on this topic. And although the tariffs are postponed until March 1, don’t think this “tariff war” is over, in fact, it’s just beginning, especially with Trump just starting his term in office (which lasts 4 years). Good luck Canada! That’s all I have to say. 

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In light of the Canadian International Auto Show coming up (running from February 14-February 23), why not check out the article we posted way back in the beginning on my experience at the show. Are you planning on going this year? Let us know in the comments of the post linked here!