WASHINGTON, D.C.—For now, the Trump Administration's 25-percent tariffs on Canadian and Mexican goods are on hold at least until March 1. But the looming threat is raising concerns for many.
In a statement released Feb. 1, Jay Timmons, president and CEO of the National Association of Manufacturers, warned against the tariff plan and the profound effects it could have on the supply chain, both in the U.S. and around the world.
"A 25-percent tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally," Timmons said. "The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs.
"These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk."
John Murphy, senior vice president and head of international for the U.S Chamber of Commerce, echoed Timmons' concerns. He urged against the Trump administration's plans in a Feb. 1 statement, saying "tariffs are not the answer."
"The president is right to focus on major problems like our broken border and the scourge of fentanyl, but the imposition of tariffs under IEEPA is unprecedented, won't solve these problems, and will only raise prices for American families and upend supply chains," Murphy said.
The chamber will continue to consult with its members to prevent economic strife across the U.S. in preparation for the incoming tariffs.
When it comes to the Canadian and Mexican tariffs, the automotive industry is poised to take some significant hits, especially considering that it relies on a complex supply chain that often sees parts crossing borders several times before making their way to their final destinations.
Automotive News reports that, if enacted, the 25-percent tariffs could raise the average price of U.S. vehicles by about $3,000 and could have a direct impact on sales. This year alone, auto sales could drop by as much 1 million vehicles if the tariffs go into effect, according to Mexico's national suppliers association.
Flavio Volpe, CEO of the Automotive Parts Manufacturers' Association, offered some perspective about how impactful the tariffs could be on auto industry.
The tariff rate, he said, is "15-percent higher than anybody's profit margin," and neither auto makers nor suppliers will be prepared to take those losses, resulting in idled plants.
"Nothing that Donald Trump says will change the fact that he will bring his own industry to a screeching halt," Volpe said.
MEMA, the Vehicle Suppliers Association, also warned there is much at stake should such tariffs take effect.
In a statement issued Jan. 30, the association referred to the tariffs as "a direct threat to American jobs and manufacturing," noting that the automotive supplier sector supports more than 930,000 jobs in the U.S.
"Tariffs of this magnitude would drive up costs for manufacturers, reduce investment in U.S. production and force job losses across the industry," MEMA officials said. "The United States-Mexico-Canada Agreement (USMCA), negotiated by President Trump and supported by MEMA, was designed to provide certainty and promote regional manufacturing. These tariffs will undermine this critical framework, creating economic uncertainty and deterring growth."
Further, MEMA contends that the tariffs would undermine America's competitiveness in the industry, a direct counter to the vision that Trump has laid out for the program. The threat of a 25-percent tariff would raise the cost of vehicle components, with rubber components like hoses and tires seeing spikes.
"At a time when inflation remains a key concern, such tariffs would further strain household budgets and disrupt affordability in the automotive sector," MEMA said. "North American trade is already the largest U.S. export market, supporting millions of American jobs.
The tire industry also is poised to take hits from any enacted tariffs on Canada and Mexico, which are key industry trading partners.
Tire Business reported that in 2023, Mexico was the second-largest exporter of tires to the U.S. with a total value of $2.18 billion. Bridgestone, Goodyear and Cooper Tire, JK Tyre, Michelin and Pirelli were named as key producers and exporters of tires.
Meanwhile, Canada was the fourth-largest exporter of tires to the U.S. in 2023, shipping a total of $1.69 billion worth of products. Bridgestone, Goodyear and Michelin were listed as key producers of Canadian-made tires.
The Mexican tire industry's rated capacity currently stands at more than 65 million passenger and light truck tires per year, as well as 1 million to 2 million truck and bus tires per year, according to Rubber News' Global Tire Report. The report also states that, in 2023 alone, the U.S. imported 22.8 million passenger tires and 1.79 million light truck tires from Mexico, accounting for 14 percent and 5 percent of U.S. tire imports, respectively.
Mexico and Canada remained key trade partners last year as well. The U.S. Census Bureau reported that through the first three quarters of 2024, the U.S. imported a total of 57.6 million tires worth $4.05 billion. Canada and Mexico accounted for 18 percent of those tires and as much as 25 percent of the total value.
Beyond the realm of North America, Trump has also discussed 10-percent tariffs on goods imported from China. Whitney Luckett, president of Colorado-based Simko North America L.L.C. and an expert on the natural rubber market, warned that tariffs on Chinese imports may not have the impact Trump is looking for.
"Nobody operates in this vacuum that is America only," Luckett said. "Most of your major chemicals, steel, tire cord—most of this stuff comes mostly from China. The problem is that you have had tariffs in place for eight years already. What type of opening of manufacturing have you seen in the United States? And the answer to that is nothing."
Luckett also spoke on the dangers of the U.S.'s new illegal immigration policies under the Trump administration. Between the loss of available workers and the new tariffs, the cost of a few of Simko's contracts with various tire companies have already risen by nearly 10 percent.
"The last time we had tariffs this high was the 1930s, and what it did was it prolonged the Great Depression," she said. "It created so much animosity worldwide. And today, we are so much more a part of a global economy.
"I think we are going to have problems because we're kicking out immigrants. Immigrants are the guys who normally take those (manufacturing) jobs... Who's going to staff these really hot factories in the American south when they're gone?"
Luckett believes that the tariffs could partially be smoke and mirrors, a negotiating tactic of sorts for Trump in his term-long mission to put "America first." But she urged that even if that tactic ends up working for the sitting president, it will have eroded trust between the U.S. and its neighbors when it comes to supply chains and manufacturing.
"It might be some sort of a bargaining tool (for Trump), but it's really hurting the credibility of the United States," she said. "Take a look at what it did to the stock market in the 24 hours (after the tariff announcements). It's upsetting your closest allies. It's upsetting the people on your borders. Psychologically, it's a questionable move. But more importantly, it hurts our manufacturing."
Prime Minister Justin Trudeau and other Canadian government officials have spoken out against the president's tariff plan in recent press conferences. Although the country is not looking to escalate matters, Canada will stand up for itself, Trudeau said.
"Canada will not bow down to a bully," Canadian economist and politician Mark Carney, the current frontrunner to succeed Trudeau as prime minister, told BBC Feb. 1.Trump, meanwhile, told reporters Feb. 3 that relationship between the U.S. and Canada has been a "one-way street." Should Canada retaliate against the U.S.'s tariff plan, the president is prepared to hike import taxes even higher on the country's neighbor to the north.
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