Shift Key with Robinson Meyer and Jesse Jenkins

The U.S. Auto Industry Wasn’t Built for Tariffs

Feb 5, 2025

Ellen Hughes-Cromwick, former chief economist at Ford and the U.S. Department of Commerce, brings her extensive knowledge of the auto industry to the table. She discusses how proposed tariffs could disrupt the intricate supply chains of North America's auto manufacturers. Ellen also explains the challenges these tariffs pose for the transition to electric vehicles and highlights the economic ramifications for consumers. The conversation delves into the relationship between protectionist policies and the growth of the electric vehicle market.

01:02:21

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Episode guests

Ellen Hughes-Cromwick

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Episode notes

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Quick takeaways

The North American auto industry's reliance on cross-border trade makes it susceptible to disruptions from proposed tariffs on imports.

Imposing tariffs could paradoxically increase vehicle prices, reducing consumer demand and potentially leading to job losses in the manufacturing sector.

Despite benefits for U.S. EV production, uncertainties from tariffs may hinder the acceleration of electric vehicle adoption by complicating supply chains and pricing.

Deep dives

Impact of Tariffs on the Auto Industry

The proposed tariffs on imports from Canada and Mexico pose a significant threat to the North American auto industry, which heavily relies on cross-border trade for parts and assembly. A potential 25% tariff would drastically alter the cost structures for automakers, as components are often sent back and forth across borders multiple times before final assembly. This disruption could lead to increased operational costs, forcing suppliers with already thin margins to shut down, thereby affecting job levels in both manufacturing and supporting sectors. The ripple effects might not only impact the auto industry but could also hinder the acceleration towards electric vehicle (EV) adoption.

Intro

1min

Tariffs and the Auto Industry

4min

Navigating Automotive Borders

4min

Navigating Tariffs and Supply Chain Challenges in the Auto Industry

14min

Tariffs and the U.S. Auto Industry

11min

Electric Vehicle Production and Tariff Implications

19min

Exploring Long-Duration Energy Storage Solutions

3min

Harnessing Hydrostorage Technology

6min

Over the past 30 years, the U.S. automaking industry has transformed how it builds cars and trucks, constructing a continent-sized network of factories, machine shops, and warehouses that some call “Factory North America.” President Trump’s threatened tariffs on Canadian and Mexican imports will disrupt and transform those supply chains. What will that mean for the automaking industry and the transition to EVs?

Ellen Hughes-Cromwick is the former chief economist at Ford Motor Company, where she worked from 1996 to 2014, as well as the former chief economist at the U.S. Department of Commerce. She is now a senior visiting fellow at Third Way and a senior advisor at MacroPolicy Perspective LLC.

On this week’s episode of Shift Key, Rob and Jesse chat with Ellen about how automakers build cars today, why this system isn’t built for trade barriers, and whether Trump’s tariffs could counterintuitively help electric vehicles. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.

Mentioned:

Trump’s Tariffs are a Warning

Rob’s downshift; Jesse’s up-ish-shift.

This episode of Shift Key is sponsored by …

Download Heatmap Labs and Hydrostor’s free report to discover the crucial role of long duration energy storage in ensuring a reliable, clean future and stable grid. Learn more about Hydrostor here.

Music for Shift Key is by Adam Kromelow.

Hosted on Acast. See acast.com/privacy for more information.

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