There will be quite a few cases where the Trump tariffs have made the U.S. a less attractive place to manufacture goods for export.
Donald Trump’s decision to (partially) renege on USMCA, the trade agreement between the U.S., Mexico, and Canada that he signed during his first term, and Canada’s entirely predictable decision to retaliate is having consequences that will hit car workers in the U.S.:
Hyundai Canada appears to be the latest automaker shifting its schedules in the wake of U.S. tariffs on automobiles and Canada’s retaliatory surcharges in return. According to a report by Automotive News Canada, the company will source more copies of its Tucson compact SUV from Mexico rather than from a plant in the U.S. . . .
This follows our recent reports on Subaru Canada, which expects that its U.S. imports could be reduced from 26% to 10% due to changes in its production locations; and Mazda Canada, which will temporarily stop importing its CX-50 from the Alabama plant where it’s made. Like Subaru and Mazda, Hyundai does not have any manufacturing facilities in Canada and must import all its vehicles.
Tellingly, it makes sense for Subaru to export some of its cars directly to Canada from Japan (Japan and Canada have a free trade agreement), rather than from Subaru’s plant in rather more nearby Indiana, a stark reminder that there will be quite a few cases where the Trump tariffs have made the U.S. a less attractive place to manufacture goods for export, an unhappy result for an administration so focused on the trade balance.
Then again, crudely tearing through the complex spider web of connections that constitute a well-functioning market will lead to that web being repaired in ways that the tariff Taliban will find . . . disappointing.
(To be fair, it’s not all bad news for U.S. autoworkers. Hyundai will be moving some of its production of Tucsons destined for the U.S. to its plant in Montgomery, Ala.)
Meanwhile (via Automotive Dive):
The largest domestic automotive groups say higher tariffs on auto parts will cost U.S. carmakers billions of dollars while scrambling the global supply chain, hiking consumer prices and lowering sales.
In a signed letter to the Trump administration, leaders from the Alliance for Automotive Innovation, the American Automotive Policy Council, the American International Automobile Dealers Association, Autos Drive America, the Motor and Equipment Manufacturers Association and the National Automobile Dealers Association said tariffs on auto parts slated to begin May 3 will be detrimental to an industry that supports 10 million U.S. jobs and has a $1.2 trillion annual impact on the nation’s economy. . . .
“Most auto suppliers are not capitalized for an abrupt tariff induced disruption,” the letter says. “Many are already in distress and will face production stoppages, layoffs and bankruptcy.”
If one supplier is disrupted, it could lead to a shutdown of an automaker’s production line, according to the letter. “When this happens, as it did during the pandemic, all suppliers are impacted, and workers will lose their jobs,” the letter reads.
No omelet without breaking eggs, etc.