Impact of Tariffs on the Automotive Industry

Introducing tariffs of 25% on imports from Canada and Mexico could significantly increase the costs associated with the automotive supply chain, which has developed over decades with much of its production spread across these countries. The automotive trade between these borders has been largely duty-free since 1965, with intricate supply chains that see components moving back and forth multiple times. Experts indicate that such tariffs could lead to an estimated rise of about $3,000 in the price of an average new car due to the additional layers of duties applied whenever parts cross the borders. This complex relationship highlights the fragility of interdependence in trade agreements and the potential economic implications of protective tariffs.