The DC Watch: Manufacturing and Politics
Import Taxes Rise for Cars Imported Nationwide Starting April, as per DC Observer Report
This space is all about keeping you up-to-date on the political scenes that could impact the manufacturing world. From tax reforms and trade deals to regulatory overhauls, we'll bring you the latest thoughts from our leaders that might sway your business strategies.
March 26, 2025: Tariffs Set for April for All Imported Cars and Light Trucks
Set your calendars – starting April 3, expect a 25% tariff on all vehicles imported into the US. But don't fret, as we've addressed a few worries from the auto industry. These tariffs won't affect the import of auto parts, ensuring the smooth flow of parts across the US-Canada border, and vehicles made in Canada and Mexico will only be charged tariffs based on their non-U.S. content. So, if a pickup truck made in Mexico has an American-made engine and stamped panels, the value of those components will be deducted from the vehicle value when determining tariff levels.
While these tariffs could make pricey vehicles even more costly, it isn't the worst-case scenario. The auto industry lobbied for exemptions for auto parts and credits for American components in vehicles made in Canada and Mexico. Ford and Stellantis had complained that tariffs on Canada and Mexico, but not Europe or Asia, gave Korean and German automakers an edge over American companies. Hyundai, which is heavily investing in U.S. production, might benefit from this, but a new steel plant probably won't impact its U.S. operations for several years.
It's still the whipsaw of tariff news that's affecting buyers. Harsh words from Cox Automotive have led to a reduced 2025 auto sales outlook of 15.6 million vehicles from 16.3 million, and some analysts predict long-term problems for U.S. automakers if these tariffs remain in place for even a few months.
March 12, 2025: Trump, Ontario Back Down from Tariff Threats
After a meeting with Treasury Secretary Howard Lutnick, Ontario dropped its 25% tariff on electricity exported to three U.S. states. In return, the U.S. dropped its threats to double import tariffs on Canadian metal to 50%. Both parties plan to meet again on Thursday to discuss broader trade issues.
These threatened tariffs would have been devastating to U.S. and Canadian automotive companies since U.S. carmakers source more than half of their aluminum from Canada. The president's further threat to tax Canadian cars would have disproportionately harmed General Motors, Ford, and Stellantis, which all rely on Canada for finished vehicles and a large number of auto parts.
March 11, 2025: Trump Threatens 50% Tariff on Canadian Steel and Aluminum, Starting March 12
After Ontario placed a 25% tariff on electricity exported to the U.S., President Donald Trump threatened to double tariffs on steel and aluminum imports from Canada to 50% as early as March 12. He also threatened to increase tariffs on Canadian-made cars, which would essentially shut down the automobile manufacturing business in Canada, according to the president. If Canada agrees to become the 51st state of the United States, these tariffs can be avoided.
These tariffs would increase the costs of everything from beer cans to engine blocks to electrical conduit for new buildings, as Canada supplies roughly a quarter of the steel used by U.S. manufacturers and 60% of the aluminum. A constant trade war will likely boost anti-U.S. sentiment in Canada, where consumers are already shunning American-made goods in favor of goods from other countries. In addition, the threat of auto tariffs would disproportionately impact Ford, General Motors, and Stellantis.
March 6, 2025: All New Tariffs on Canada and Mexico Paused Until April
An executive order signed by President Donald Trump delayed tariffs on Canadian goods, aligning with tariffs on Mexican goods, which were already delayed until April 2. The order only applies to goods covered under the U.S.-Mexico-Canada Agreement (USMCA), the free trade pact negotiated by the president.
These delays will be welcome for businesses that rely on raw materials and finished goods from Mexico and Canada. As automotive parts are taking the brunt of the cross-border tariffs, the longer delay will be a relief. The constant uncertainty about the future of U.S.-Mexico-Canada trade will still make it difficult for businesses to plan for the future.
March 5, 2025: All New Tariffs on Mexico Paused Until April
After speaking with Mexico President Claudia Sheinbaum, President Donald Trump agreed to pause tariffs on all products covered by the U.S. Mexico Canada Agreement (USMCA) until April 2, calling their relationship "a very good one."
These delays will be welcome for businesses that rely on raw materials and finished goods from Mexico. The back-and-forth tariffs and counter-tariffs could escalate anti-U.S. sentiment in Mexico, as well as in Canada. These tariffs would particularly impact those traces that are 60% reliant on Canadian aluminum imports. The threat of auto tariffs would disproportionately impact Ford, General Motors, and Stellantis.
March 3, 2025: Mexico, Canada Auto Parts Tariffs Paused Until April
At a news conference, White House officials said President Donald Trump has talked to automakers, who expressed concerns about 25% cross-border tariffs causing damage to automotive production. The White House is delaying enforcement on tariffs on auto parts until April 2.
Manufacturers have strong concerns that tariffs on the U.S.'s closest trading partners will raise the costs of goods, spike inflation, and make it nearly impossible to plan for future investments. Since more than any other industry relies on cross-border trade with vehicle components crossing all three national boundaries multiple times before ending up in finished vehicles, the automotive industry is particularly vulnerable.
February 27, 2025: China Tariffs Boosted to 20%
President Donald Trump raised tariffs to 20% on all goods imported from China, up from the existing 10% tariff, which had been put into effect with an executive order in early February. Beijing has already imposed retaliatory tariffs on certain imports following Trump's first executive order, and more could follow now that the tariff has been raised.
These increased tariffs could drive up costs for manufacturers that rely on products made in China, as a large number of them have supply chains that include products made in China. The impact on manufacturers will depend on the amount and type of goods they import from China, but it's likely that tariffs could also boost the pricing power for domestic producers of certain products.
February 26, 2025: Mexico, Canada Tariffs Delayed Another Month
In response to questions from reporters at his first cabinet meeting, President Donald Trump said he agreed to pause tariff enforcement against both Canada and Mexico for another month, pushing the enforcement date back to at least April 2. The pause is intended to give both countries more time to increase border security efforts to slow the flow of fentanyl into the United States.
Recent user surveys show that tariffs on our northern and southern neighbors are a major concern for manufacturers throughout all three nations. Major trade groups have expressed concerns that tariffs would hammer the auto industry and other manufacturing businesses. Extending the pause for another month eases those concerns, but long-term strategic planning could still suffer if tariff enforcement becomes a month-to-month concern.
More News from Washington
Other publications owned by our website's parent company have also been writing important stories about the latest developments in Washington.
- Chemical Processing: Tariff Threat Strains U.S.-Canada Chemical Trade Bond
- Material Handling & Logistics: Import Cargo Levels to Remain High Ahead of Rising Tariffs
- ProBuilder: Trump Moves to Cut Energy-Efficiency Building Program
- Probuilder agrees that the constant uncertainty surrounding ongoing tariff negotiations between the US and its neighboring countries, such as Canada and Mexico, is a significant concern for manufacturers.
- The auto industry had proposed exemptions for auto parts and credits for American components in vehicles made in Canada and Mexico, aiming to mitigate the potential harm from proposed tariffs.
- Politics and tariffs continue to impact the general-news and crime-and-justice sectors, with threats of increased tariffs on Canadian steel and aluminum, potentially boosting anti-U.S. sentiment in Canada.
- On Monday, a new round of tariffs is set to be implemented, with a 25% tariff proposed for all imported cars and light trucks, though there are adjustments to ensure a smooth flow of parts across the US-Canada border.
