It’s feeling more and more like Groundhog Day as we approach April and I publish my third tariffs-related post.
On April 2nd, President Donald Trump is expected to announce a 25% tariff on all passenger vehicles assembled outside the United States. The stated goals?
Bring back American auto jobs
Re-anchor vehicle production inside U.S. borders
Let’s break that down.
Will this bring back American auto jobs?Possibly — but not like it used to. Relocating production doesn't guarantee large-scale hiring. In many cases, it accelerates automation, which reduces the number of line workers needed and increases demand for technical talent.
Will this re-anchor vehicle production in the U.S.?Final assembly might move back, but critical components — wiring harnesses, electronics, seating systems — will still come from Mexico, Canada, and overseas. You can’t re-anchor something that’s globally intertwined without major disruption.
Before we dive into the scenarios, here’s what’s coming if this policy holds:Prices will spike. Supply chains will snap. Trucking networks? Buckle up. And when the dust settles, it won’t just be the big guys feeling it — it’ll be your neighbor’s small business, the local dealership, and anyone trying to buy a car that doesn’t cost as much as a college degree.
So before we dive into scenarios, here’s what’s coming:
This policy has the potential to:
Jack up prices on half the cars in America
Disrupt the carefully balanced trucking networks that keep everything from produce to furniture moving
Hurt small businesses who rely on stable logistics networks and affordable transportation
Shake up stock markets and rattle already-fragile supply chains
Let’s walk through it.
Where Our Cars Actually Come From
In 2024, cars sold in the United States are assembled in three primary places:
50% in the United States
25% in Mexico and Canada
25% in countries overseas — including Japan, South Korea, Germany, the UK, Italy, Sweden, and China
So yes — half the cars on U.S. dealer lots will face a 25% price hike overnight if the tariff is implemented.
But even that oversimplifies things.
North America: One Deeply Entwined Supply Chain
Cars may be assembled in the U.S., but thousands of parts come from across North America. A wiring harness made in Mexico gets shipped to a U.S. plant. An aluminum cast component comes from Canada. An electronic module might get programmed in Texas but physically built in Chihuahua.
This isn’t just about final assembly — it’s about a vast, deeply integrated manufacturing network that stretches across borders.
Most businesses in this ecosystem don’t even realize how much they rely on one another. That seat supplier in Kentucky? They might be waiting on foam produced in Mexico. That stamping plant in Ohio? They’re running dies made in Canada.
Pull one thread, and the whole system tightens. Hard.
The Three Scenarios
Let’s assume the tariffs are announced. What happens next depends on what the policy is really meant to do. I see three possible outcomes:
1. It’s a Negotiation Tactic
Trump might be looking for a headline-making bargaining chip — a way to extract trade concessions from Mexico, Canada, the EU, or China. If so, the tariffs could be short-lived or never fully implemented. Markets get jittery. OEMs make noise. Then things settle.
2. Automakers Shift Final Assembly to the U.S.
Some OEMs may absorb short-term pain and start relocating final assembly stateside. But this doesn’t solve everything. The vast supplier ecosystem remains global — and the cost of making cars here goes up. Consumers pay more, slowly but steadily.
3. The U.S. Tries to Rebuild the Entire Auto Manufacturing Base
This is the extreme version: not just assembly, but parts, modules, electronics, metals — all brought back onshore. It would take a decade and hundreds of billions of dollars. And it would still cost consumers more. It would also likely spark retaliation from trading partners.
Now let’s unpack how this plays out across key groups.
Who Gets Hit the Hardest?
Automakers:
OEMs with Heavy Overseas or North American Assembly Outside the U.S.:
Volkswagen – Assembles in Mexico (Jetta, Tiguan) and Germany (Golf, ID.7)
Toyota – Japan (Crown, Prius), Mexico (Tacoma)
Honda – Japan (Fit), Mexico (HR-V)
Hyundai/Kia – South Korea (multiple models)
BMW – Germany (3 Series, 5 Series), U.S. (SUVs in Spartanburg)
Mercedes-Benz – Germany (C-Class, E-Class)
Mazda – Japan (Mazda3, CX-5), Mexico (Mazda2)
Nissan – Japan and Mexico
Volvo – Sweden and China
Even automakers with U.S. plants rely on international production to meet demand. Many models are too small in volume or too expensive to justify duplicating production lines in multiple countries.
The Real Cost of "Made in America"
If tariffs are imposed, automakers have three options:
Eat the cost (unlikely, unless they want to burn billions in margin)
Raise prices (inevitable)
Move production to the U.S. (long, expensive, and still ends in higher prices)
Relocating production sounds patriotic, but here’s the rub:
Building a new assembly plant takes 3–5 years
Cost per plant: $1B to $8B
Most new U.S. plants (like Hyundai’s in Georgia or Ford’s BlueOval City in Tennessee) take years to ramp up to full capacity
And this is just final assembly. What about wiring harnesses, transmissions, seats, or lithium-ion batteries? Many of these components aren’t even manufactured at scale in the U.S.
So, relocating means also rebuilding a supplier ecosystem. That takes even longer.
Who Pays for It? Spoiler: You.
Let’s say you’re a middle-income family shopping for a $30,000 sedan.
If that car was assembled overseas, congrats — it now comes with a $7,500 patriotism surcharge. That’s how you get to $37,500, overnight. If the OEM decides to relocate production, those costs still get passed along — just more slowly.
By 2030, that same sedan could cost $41,500 as the automaker bakes in:
CapEx from building new plants
Higher U.S. labor costs
More expensive domestic supply chain components
In 2024, the median U.S. household income was about $70,000. A $41,500 car is nearly 60% of annual income.
But It Doesn't Stop With Cars
Automotive freight is the bedrock of the U.S. trucking network. This isn't just an international trade story — it hits close to home for trucking companies and drivers across the country. Auto freight keeps lanes moving, schedules predictable, and drivers paid.
When that freight disappears or gets delayed:
Keep trucks moving consistently
Avoid empty miles
Anchor pricing and driver pay
Trucking companies lose steady volume that keeps their networks balanced
Truck drivers feel the pinch as loads dry up and miles shrink
Rates drop further in an already brutal freight market
Shippers of other goods — like groceries, electronics, and furniture — pay more because the system becomes less efficient**
I asked ChatGPT (so if these numbers aren't perfect, they're still illustrative):
If freight costs double because of a collapsed network, a:
$100 grocery bill becomes $106
$500 TV becomes $530
$1,000 couch becomes $1,150
These are small increases in isolation. But they affect every single household, especially lower-income families.
And small businesses that rely on cost-effective trucking? They’re the first to feel the squeeze.
What About Jobs?
Bringing jobs back sounds great — and more manufacturing onshore is a noble goal. But we need to be realistic about what that means.
Tesla’s Gigafactory in Texas and BMW’s Spartanburg plant show us what modern U.S. auto manufacturing looks like: highly automated, technologically advanced, and run by a lean workforce. Ford’s BlueOval City will follow the same model.
And as my former coworker Harrison Hawthorne — a senior buyer for Production Transportation and Logistics for Volkswagen Group of America — pointed out on LinkedIn (link here), even U.S.-assembled vehicles rely on a complex web of components from outside the country. He also shared a list of 47 models assembled in Mexico and Canada that are now directly in the crosshairs.
The result? If production does move back, the actual number of new jobs — especially traditional line jobs — will be limited. Those roles will be fewer, more technical, and harder to fill — especially in a labor market where unemployment is already under 4.1%.
The Stock Market Will React — Hard
The companies affected are not just foreign:
GM and Ford build extensively in Mexico
Tesla relies on Chinese battery materials
Tier 1 suppliers like Bosch, Magna, and ZF have deep footprints in Mexico and Europe
If these tariffs really land:
Stock prices fall
Inflation ticks up
Wall Street volatility continues
What Happens If OEMs Can't Absorb the Shock?
Simple: they make fewer cars.
Inventory dries up
Used car prices spike (again)
Consumers delay purchases
Small suppliers go bankrupt
And the worst-case scenario? Retaliatory tariffs. Suddenly, U.S.-made vehicles get more expensive in Europe or Asia. Global automakers rethink their investment in America. Fewer jobs, not more.
The Punchline: Be Careful What You Wish For
If you want more American manufacturing — great. So do I.
But you don’t get there by slamming the brakes on a deeply integrated North American supply chain that took decades to build.
This tariff might feel like a political win. But the costs — to consumers, small businesses, truckers, OEMs, suppliers, and the broader economy — are very real, and very high.
And they’ll show up fast.