Tariffs on Canada, Mexico could crash the US auto industry

The situation: The North American automotive supply chain is deeply intertwined—one vehicle component may cross the US-Canada and US-Mexico borders up to eight times before reaching the final assembly. That applies both to complex parts like engines and simple ones like the circuit board in car seats, per the Cato Institute.

• Each time an item crosses into the US, automakers would have to pay a duty under the terms of the Trump administration’s across-the-board tariffs on all trade with Mexico and Canada. That means it’s not just the 1 in 4 vehicles sold in the US that come directly from Canada or Mexico that would face 25% tariffs—but also the components that cross borders during production.
• Tariff-related costs could drive up the average price of a new car by about $3,000, per a Wolfe Research analysis cited in Bloomberg. Trucks and larger vehicles imported from Canada and Mexico, prices could jump by more than $10,000, Patrick Anderson, CEO of Anderson Economic Group, told The New York Times.