Auto Industry Curious What Trump's Tariffs Could Mean For It

Automakers are preparing for major shifts in U.S. trade and environmental policy under President-elect Donald Trump.

With the potential for new tariffs on vehicles imported from Mexico and other nations, along with a rollback of electric vehicle (EV) incentives and emissions regulations, industry leaders are bracing for impacts on production strategies and EV investments according to a new report from Reuters.

Trump has signaled his intention to impose tariffs as high as 200% on Mexican-made vehicles, it's unclear if the administration could target Asian and European imports as well. These tariffs aim to boost domestic manufacturing, with Trump suggesting he could offer incentives to foreign automakers—even some Chinese companies—to build U.S. factories and hire American workers.

While such moves may bolster domestic jobs, they could also lead to higher production costs, especially as automakers increasingly rely on supply chains spanning Mexico and Asia. It's unclear at this point how the plan will look come 2026.

In Mexico, automakers like General Motors, Ford, Honda, and Toyota may face hard choices if tariffs are implemented. Honda, for example, exports 80% of its Mexican-made vehicles to America, and is considering a shift in production, while Toyota could relocate its Tacoma production to Texas if tariffs become permanent. It's also unclear how or if tariffs would affect vehicles produced in Canada.

Trump’s proposed rollbacks of EV incentives and stricter tailpipe emissions standards could further reshape the industry. While some automakers, including Tesla, are open to collaboration, uncertainty looms over billions of dollars invested in EV infrastructure and battery production.

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