In response to President Donald Trump’s proposed 25 percent tariffs on products built in Canada and Mexico, Stellantis is promising to build more cars in the United States of America.
From Reuters:
“We share the President’s objective to build more American cars and create lasting American jobs. We look forward to working with him and his team,” Stellantis said in a statement.
Volvo has also suggested it might move some production to the States.
Right now, according to Reuters, Stellantis imports about 40 percent of the vehicles it sells from Canada and Mexico. The company has facilities in all three countries.
Here’s the thing, though — it’s difficult for automakers to shift production plans quickly. Future production plans start years in advance — it takes about three to five years for an OEM to design and test a new model or the next generation of an existing model. Not only that, but even if a car is built in the U.S., parts and components may be sourced from other countries. So a cynic might suggest that Stellantis is playing nice publicly with the president while trying to figure out how to best adjust to tariffs.
Again, from Reuters:
“The short-term problem for the automotive industry is that supply chains cannot be relocated domestically or new plants cannot be built in a month,” said Commerzbank economists Bernd Weidensteiner and Christoph Balz in a note. “It’s therefore foreseeable that the pain in the automotive industry will increase significantly in the coming months when many important preliminary products become more expensive. Consumers face the threat of significantly higher prices.”
For example, there are reports that Honda might shift production of the next Civic Hybrid from Mexico to Indiana. But if that happens — and Honda wouldn’t confirm it — it wouldn’t happen until 2028. That obviously means that if Trump enacts the tariffs that are currently on pause, it would take three years for Honda to adjust production of that model. And Trump would be nearing the end of his second and final term as president — his successor might not continue the tariffs.
This is why I’d hate to be involved in any sort of OEM product planning right now.
Back to Stellantis — 25 percent tariffs could cost the company $17.5 billion this year.
We’ll see what happens. As noted, the tariffs are on a one-month pause for automakers. I have a feeling the “T” word will be a part of our coverage on a near-daily basis for a while.
[Images: Stellantis, Honda]
Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.
