Trump, tariffs and the war on EVs

True to his word, on his first day in office, President Donald J. Trump revoked an executive order signed by his predecessor which aimed to make half of all new cars sold in the United States electric by 2030. President Biden’s ambition, supported by both US and foreign car makers and the auto unions, was only that: an ambition. It never had the force of law, and certainly wasn’t the ‘Biden EV mandate’ against which Trump railed in his campaign.

And he has now followed that order with the imposition of 25 per cent tariffs on imports from Canada and Mexico. Around a third of the cars sold in the United States by its Big Three car makers are built on the other side of those borders. Around $225bn of cars and parts will be hit with $56bn of additional cost, much of which will be passed on to American car buyers. Analysts estimate that the price of imported vehicles could rise by an average $10,000, including all-American combustion-engined models like the Chevy Silverado and Ram HD pickups, the Ford Bronco Sport and the Dodge Charger.

The Japanese and European car makers are also heavily invested in plants in Mexico and Canada, and tariffs on imported parts will affect the cost of almost every car assembled in the US. And while the effect on prices will be bad, the disruption to a previously well-integrated manufacturing ecosystem and the impact on the jobs it supports will be worse. ‘The auto sector is going to shut down within a week,’ said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association. ‘At 25 per cent, absolutely nobody in our business is profitable by a long shot.’