US president Donald Trump’s newly announced tariffs on imported cars are already having an impact on American jobs, triggering immediate disruptions across the North American automotive sector.
Canadian and Mexican production halts
Stellantis was first cab off the rank, halting production at its Canadian and Mexican plants and temporarily laying off 900 US workers following the announcement.
The company cited the tariffs and the resulting drop in demand as the reason for the shutdowns at its Windsor, Ontario plant – which will close for two weeks starting Monday – and its Toluca, Mexico plant, which will remain shut for the rest of April.
Combined, these sites employ 6,900 workers. The fallout has now reached five Stellantis plants in Michigan and Indiana, where US workers responsible for powertrains and stampings are being stood down.
Highly integrated supply chain
While Trump has repeatedly cited the ramping up of domestic production and US jobs as a justification for the tariffs and promised that they’ll revive American auto manufacturing – saying they’ll spur “tremendous growth” – experts say the reverse will happen, because of the complexities of the highly integrated North American auto supply chain.
Many of the 3.6 million vehicles exported annually to the US from Canada and Mexico are models not currently produced in the US. Building or retooling plants could take years.
What’s more, the lucrative parts trade will suffer. According to federal trade data, US suppliers exported US$35.8 billion in parts to Mexico and US$28.4 billion to Canada last year.
If Canadian and Mexican production slows, the knock-on effects could ripple through the 550,000 US workers employed by parts suppliers – twice the number working in assembly plants.
Reduction in production
Industry analysts at Cox Automotive forecast a 10% to 20% reduction in North American car production, escalating to 30% if tariffs are expanded to cover imported parts.
Alliance for Automotive Innovation CEO John Bozzella told CNN: “Additional tariffs will increase costs on American consumers, lower the total number of vehicles sold inside the US and reduce US auto exports – all before any new manufacturing or jobs are created.”
Union criticism was even more stark: “Trump is about to learn how interconnected the North American production system is,” said Canadian union Unifor boss Lana Payne.