Photo Courtesy of WFAA
ARLINGTON, Texas — President Donald Trump announced that the United States would impose a 25 percent tariff on imports from Canada and Mexico starting at midnight on Monday, a move that has raised concerns among automakers and car dealers.
The automotive sector stands to be one of the hardest hit by this new economic policy. The tariff will apply each time an item crosses the U.S. border, meaning some car parts could face multiple taxes before they’re even installed in vehicles.
Trump argues that tariffs will force companies to relocate manufacturing plants to the U.S. and that they will serve as a bargaining tool in immigration policy discussions with Mexico and Canada.
“It’s very exciting for the automobile companies,” Trump said during a news conference on Monday.
However, the auto industry isn’t sharing the president’s enthusiasm.
Matt Blunt, president of the American Automotive Policy Council, expressed concerns, stating, “We continue to believe that vehicles and parts meeting the USMCA’s strict domestic and regional content requirements should be exempt from this tariff increase. Our American automakers, who have 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 U.S. and discourage investment in the American workforce.”
Economists warn that, in the short term, tariffs will increase costs, which will ultimately be passed on to consumers.
Arlington Mayor Jim Ross is particularly concerned that higher prices could deter buyers, potentially leading manufacturers to scale back production. General Motors’ Arlington plant, one of Tarrant County’s largest employers, produces SUVs with a workforce of more than 5,000 people.
“As mayor, my job is to protect those who are gainfully employed here,” Ross told WFAA. “That’s why I’m passionate about saying, ‘Enough with the tariffs.’”
Ross, along with San Antonio Mayor Ron Nirenberg, wrote a letter to U.S. Senators John Cornyn and Ted Cruz, calling the proposed tariffs “job-killing.”
“We already have a great manufacturing plant making every SUV for General Motors right here,” Ross said. “Let’s not disrupt that by imposing tariffs and pushing those costs onto U.S. consumers.”
Ross added, “Now, we’re jeopardizing what we’ve built here in Texas with these types of threats.”
A study by the Anderson Economic Group predicts the tariffs could be more damaging to the automotive industry than the record-breaking 2024 United Auto Workers strike against General Motors. They estimate that a 25 percent tariff would raise the cost of producing North American-assembled vehicles by between $4,000 and $10,000.
These price hikes, however, may not be immediate, as most car dealers have enough stock to last two to three months before the tariff takes full effect.
“You’ve got time before the parts actually reach the manufacturer and go onto the cars,” said April Ancira, former chair of the Texas Auto Dealer’s Association. “That’s about two to four months out, depending on the vehicle type. If you’re concerned, I’d suggest coming in now.”
Ancira, who owns multiple dealerships in San Antonio, fears that higher prices will lower demand, forcing dealers to slash prices and take losses on new vehicles. Even so, she expects customers will still pay more than they would have before the tariffs.
“There’s no clear winner in the short term,” Ancira said. “A lot of people are just hoping it doesn’t happen.”
On a more positive note, she suggested that reduced demand might prompt the Federal Reserve to cut interest rates, which could help offset the impact of higher prices due to tariffs. She also noted that dealers might focus more on used cars to keep inventory costs down.
Following Trump’s tariff announcement, the stock market reacted negatively. Now, the auto industry will closely monitor whether Canada and Mexico retaliate, potentially driving prices even higher.
