Social media is a tool meant to be used to communicate thoughts and ideas to the world, but for newly-seated President Donald J. Trump, a smartphone and 1000 characters can act as much an effective tool as a ruler’s scepter.
On the evening of Monday, November 25, Trump used his social media platform Truth Social to announce that upon arrival at the Oval Office, he would levy new 25% tariffs on “ALL products coming into the United States,” citing cross-border issues such as illegal immigration and drug trafficking as justification.
“This Tariff will remain in effect until such time as Drugs, in particular, Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long-simmering problem,” Trump said.
“We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”
As the new administration gets settled in, the returning president laid out his latest plans that could impact and/or delay Americans from getting a new car; even those from ‘domestic’ Detroit brands.
President Donald Trump in the Oval Office on January 20, 2025 in Washington, DC.
Anna Moneymaker/Getty Images
Trump delays tariffs, but not for long
On January 20, the Trump Administration laid out what it called its “America First Trade Policy” in a publicly-available document.
The document, which is a memorandum for multiple Administration officials, including the Secretary of State, Treasury, Defence, Commerce, Homeland Security, the Office of Management and Budget director, the U.S. Trade Representative, the Assistant to the President for Economic Policy and the Senior Counselor for Trade and Manufacturing, is meant to establish a “robust and reinvigorated trade policy” that benefits the country’s interests.
The administration calls on the named officials to “investigate the causes of our country’s large and persistent annual trade deficits […] as well as the economic and national security implications and risks resulting from such deficits.” Additionally, it calls on them to suggest recommendations, such as a “global supplemental tariff or other policies, to remedy such deficits.”
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Though it lays out the groundwork for his trade doctrine, President Trump himself was not subtle about the targets of said tariffs.
Building off of his November 2024 Truth Social post, President Trump signaled late on January 20 that he plans to impose his previously teased 25% tariffs on goods originating from the States’ most immediate neighbors.
Again, he levied his justification by reiterating the same points regarding Mexico and Canada as he said on Truth Social.
“We’re thinking in terms of 25% on Mexico and Canada because they’re allowing […] vast numbers of people to come in and fentanyl to come in [across the U.S. border],” Trump said in front of reporters in the Oval Office on the evening of January 20. “I think we’ll do it February 1st.”
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Cross-border tariffs can make cars more expensive, TD report says
Trade deals like the United States–Mexico–Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) implemented in 1994, allows for automakers to set up factories in the United States’ immediate neighbors Canada and Mexico for export and sale in the States.
Namely, many automakers including BMW, Honda and even Detroit’s Big Three export many models from factories in Mexico for U.S. consumption, however, a new report from Canadian banking giant Toronto-Dominion (TD) suggests that President Trump’s idea that shifting Canadian-made car models to the sates is a costly endeavor.
In a study, which is aptly called “Setting the Record Straight on Canada-U.S. Trade,” TD Economics noted that the Great White North exports about a million and a half new cars over our Northern border and that Canadian-made cars account for about 8-9% of new car sales in the States.
Many of these imported ‘Canadian cars’ vehicles are some of the best-selling models for some automakers, who use Canadian-made cars to supplement the demand that their stateside factories are already under.
Toyota’s (TM) bestselling RAV4 is made in Woodstock, Ontario, while Honda’s (HMC) bestselling CR-V and Civic are made at its Alliston, Ontario plant. Detroit manufacturers are not exempt; Stellantis (STLA) builds the Chrysler Pacifica minivan right across the Ambassador Bridge in Windsor, Ontario.
Canadian Prime Minister Justin Trudeau drives a bolt during the installation of a front end assembly on a Honda CRV during an event at the Honda of Canada Manufacturing Plant 2 in Alliston, Ontario, Canada, on April 25, 2024
But to shift production stateside, the Toronto-based bank warns that there are “significant near-to-medium term challenges” for automakers along the way.
“To fill that gap, [U.S. automakers] would need to raise production by more than 10 percent relative to current levels,” TD said in its report. “Based on the average production capacity of 225,000 units for existing assembly plants, that would mean roughly six new plants would be required.”
Additionally, the bank warned that a potential tariff with Canada could impact automakers and U.S. consumers’ wallets.
They estimate that shifting current non-U.S. production to the States would require more than $50 billion in new investment, noting that a significant production shift would also increase automakers’ reliance on imported auto components.
“While President Trump has mused that the U.S. could replace Canadian auto exports with its own domestic supply, the highly integrated North American supply chains is a major complicating factor,” the report said.
“A fact that is not well known: The U.S. is a net exporter to Canada of manufacturing goods, particularly motor vehicles and parts. The auto sector is the poster child for integrated trade between the two countries, as well as Mexico.”
TD warns that with Trump’s tariffs intact, the price of the average new car in the U.S. could rise by about $3,000, depending on “retaliation” acts by Canada and Mexico. With the average price of a new car reaching nearly $49,000 in December 2024, as per Cox Automotive data, the bank warns that any actions could result in actual economic disruptions.
“In the event of strong counteractions, severe trade dislocations and significant economic consequences would occur, leading to collapsing demand in [the U.S., Canada and Mexico].”
Toyota, Honda, and Stellantis stock is traded on the New York Stock Exchange under the tickers TM, HMC, and STLA.
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