03/02/25
US tariffs to push automotive prices higher
Houston, 3 February (Argus) — US tariffs on Canada and Mexico would likely lift
automotive production costs noticeably higher as automakers and their suppliers
rely on multiple cross-border shipments. US president Donald Trump said over the
weekend he would enact 25pc tariffs on imports from Canada effective 4 February,
but delayed Mexican tariffs until at least March . An all-encompassing tariff on
the two and potential retaliatory tariffs could severely hamper regional
automotive producers, which draw from cross border flows for both raw materials
including finished steel and aluminum as well as integral parts and components.
The tariffs are meant, in part, to drive more manufacturing back into the US —
as General Motors chief executive Mary Barra said her company would likely do
should the tariffs be imposed on Canada and Mexico. Other automotive
manufacturers could possibly follow suit in order to escape the increased costs
associated with tariffs. But shifting operations from one country to another
would be costly and time consuming. Some manufacturers produce parts for the
same vehicle on different sides of the border, meaning even a car or truck
assembled in the US could see its costs increase if it relies on parts made by
the same company at a Canadian factory. Completed vehicles The US imported
2.855mn of its smaller passenger vehicles from Mexico and Canada between January
and November of 2024, according to customs data, or about 41pc of all such
vehicles. The two nations also accounted for the import of 1.16mn heavier
vehicles designed for the transport of goods in the same period, or about 95pc
of all of those vehicles. Mexico alone sent 83,201 tractors to the US for the
year-to-date 2024, roughly 39pc of the US total. Automotive parts Cross border
flows of parts and accessories could be curtailed even more as they likely will
have to cross in and out of the US in multiple stages, potentially receiving
multiple 25pc tariff hits. The US imported 3.4bn motor vehicle parts and
accessories from the two countries or about 38pc of all such imports, and
exported 3,073t of these parts back across the border to Canada and Mexico.
Nearly 90pc of the US' exports of spark-ignition piston engines, or 3.57mn
units, were sent to Canada and Mexico, while 30pc of all US imports of such
engines, or 2.26mn units, come from the two countries. The US imported roughly
82pc or 43,582t of its cast-iron parts for internal combustion engines from
Mexico. Metal mounting and fitting imports for automobiles from Mexico alone
represented 73pc of US totals, with the US in return exporting 64pc of such
products back to Mexico. Canada took in 24pc or 29,035 metric tonnes (t) of the
product. The US acquired 40pc or nearly 36,000 of larger auto bodies and chassis
from the two nations in 2024, while sending 57.5pc of its exports or 21,553 back
across the same borders. Alternatives limited Although some alternative import
sources do exist, many of these auto plants are located inland of key receiving
ports and have closely tied operations that could require multiple stagged parts
replacements. Some vehicles are estimated to cross US borders into Canada and
Mexico and back as many as seven or eight times before final assembly, according
to a 2021 Congressional Research Service paper. China would be a major
alternative supplier for US or Canadian automotive parts in multiple cases,
including for internal combustion engines. The US imported $87.1bn in light
vehicles from Canada and Mexico and $77.5bn in automotive parts in 2022,
according to a 2023 US International Trade Commission report. Any tariff could
notably sting regional automotive producers just climbing out of multi-year low
sales levels. US total vehicle sales hit a seasonally adjusted annual rate of
17.22mn in December, the highest level since May of 2021, according to Federal
Reserve data. By Cole Sullivan and Zach Schumacher US automotive imports from
Canada count Jan-Nov 2024 Jan-Nov 2023 Diff ±% Share of total volumes Full
vehicles, bodies, and chassis Tractors 1,612 1,395 217 15.60% 0.80% Motor
vehicles 915,408 1,138,494 -223,086 -19.60% 13.00% Motor vehicles for transport
of goods 152,232 150,279 1,953 1.30% 12.50% Special-use vehicles (ex.
firetrucks) 1,826 1,554 272 17.50% 53.40% Work trucks (ex. airport luggage
vehicles) 1,595 1,656 -61 -3.70% 8.00% Vehicle chassis fitted with engines 1,821
1,622 199 12.30% 14.60% Vehicle bodies 8,896 8,584 312 3.60% 11.50%
Spark-ignition engine parts 705,337 924,439 -219,102 -23.70% 9.40%
Compression-ignition engine parts 3,198 3,759 -561 -14.90% 0.10% Parts and
accessories 1.23bn 1.28bn -48mn -3.80% 13.70% — US Census Bureau US automotive
imports from Mexico count Jan-Nov 2024 Jan-Nov 2023 Diff ±% Share of total
volumes Full vehicles, bodies, and chassis Tractors 83,201 108,267 -25,066
-23.20% 38.90% Motor vehicles 1.94mn 1.79mn 151,439 8.50% 28.00% Motor vehicles
for transport of goods 1,007,433 919,850 87,583 9.50% 82.40% Special-use
vehicles (ex. firetrucks) 35 70 -35 -50.00% 1.00% Work trucks (ex. airport
luggage vehicles) 6,513 4,214 2,299 54.60% 32.50% Vehicle chassis fitted with
engines 4 7 -3 -42.90% <0.1% Vehicle bodies 25,285 15,922 9,363 58.80% 32.60%
Spark-ignition engine parts 1,551,874 1,415,311 136,563 9.60% 20.60%
Compression-ignition engine parts 1,526,994 1,943,567 -416,573 -21.40% 68.60%
Parts and accessories 2.17bn 2.18bn -8,121,686 -0.40% 24.30% — US Census Bureau
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