“He’s never asked me for a favour in business whatsoever,” Trump said at an Oval Office event on Wednesday as he signed the proclamation putting the auto tariffs in place. “I’m actually a little surprised by it.”
While shares in car stocks across the globe fell, Tesla was 1.5 per cent higher on Thursday. It is a rare positive session for the company, which has seen his shares battered this year, losing 27 per cent.
The electric vehicle maker has large factories in California and Texas that churn out all the cars it sells in the US, insulating it to a greater degree from Trump’s new levies on auto imports and key components.Credit: Bloomberg
The tariffs give automakers that heavily source parts in the US an edge, and Trump also allowed an exemption: The new levies will only apply to the non-US share of vehicles and parts imported under a free-trade agreement with Canada and Mexico.
That stands to soften the blow for vehicles whose supply lines zigzag across the continent. Tariffs on parts from Canada and Mexico that comply with the trade deal also won’t take effect until the US sets up a process to collect those levies.
The US neighbours could use that window to try to stave off full implementation, even if it’s a long shot.
The move is nonetheless a broadside against the continent’s free-trade agreement that Trump renegotiated during his first term in office that has given rise to a closely integrated supply chain spanning North America. Canadian Prime Minister Mark Carney called the tariffs a “direct attack.”
Foreign brands heavily reliant on imported vehicles will face the most pressure. South Korea’s Hyundai risks being among the hardest hit. Although the carmaker and its affiliate Kia have plants in Alabama and Georgia — and announced a $US21 billion ($33.3 billion) US expansion plan this week — it imported more than a million vehicles to the US last year, accounting for more than half of its sales in the country, according to figures from Global Data.
‘He’s never asked me for a favour in business whatsoever.’
Donald Trump dnied that Elon Musk is getting special treatment.
Hyundai “remains committed to the long-term growth of the US automotive industry through localised production and innovation,” the company said in a statement, noting it employs 570,000 people in the US.
Hyundai and Kia may have to pay as much as 10 trillion won ($11 billion) every year for tariffs to the US if the 25 per cent tariffs are executed, according to Hyuk Jin Yoon, Seoul-based analyst at SK Securities Co. That accounts for nearly 40 per cent of total operating profit that the two carmakers earned in 2024.
And despite having four assembly plants spread across Kentucky, Indiana, Mississippi and Texas, plus engine plants in West Virginia and Alabama, Toyota, the world’s biggest automaker, imports about half of what it sells in the US. A representative of Toyota said that the company’s Mexico operations are 100 per cent compliant with the USMCA free-trade agreement.
Detroit’s carmakers weren’t spared, either. GM imports some Chevrolet Silverado pickup trucks from plants in Mexico and Canada, the entry-level Chevy Trax compact SUV from South Korea and its family car, the Chevrolet Equinox crossover SUV. Last year, GM sold more than 200,000 each of the Equinox and Trax, which are among its cheapest vehicles. The automaker also makes electric versions of the Equinox and Blazer in Mexico.
Stellantis NV makes the Jeep Compass and Wagoneer S SUVs in Mexico. The company imports its Chrysler Pacifica minivans from Canada and compact Dodge Hornet and Fiat 500 from Italy.
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And even though Ford is more US-reliant than its cross-town rivals, it faces pain of its own. The carmaker builds its entry-level Maverick small pickup in Mexico as well as the Bronco Sport compact SUV and Mustang Mach-E electric vehicle.
Bloomberg
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