Most of the car makers already have car manufacturing capacity in the US. Toyota, Ford, GM, Stellantis, whatever. They can't pass on the costs because demand will crater, nor can their margins absorb it, so the only solution is going to be increased production within the US to avoid the tariffs, while throttling output in Canada/Mexico. 3.5 years is a long time, most of these C-suite execs have a few quarters to avoid such risks and do something about it, they don't have 4 years to wait it out.
Maybe there's some deal and tariffs are dropped before next month, maybe not. If not though, you're going to see reshoring, 100%, who knows to what level but at least some will make the move, because this is a behemoth market and there is no other market able to absorb that type of supply level.
It appears on looking a bit further into it that its going to take some time. The date is next week but its not actually if you dig into it. That's just a media date.
Because auto's are complex but not complex if that makes any sense it appears the gov't wont implement tariffs on the parts coming from Canada until they can figure out a way to actually track and sort that. Not complex because a system should be doable for that, complex because of all the thousands of inputs / parts. The new policy says USMCA-compliant auto parts will remain tariff free until the Secretary of Commerce in consultation with US customs and Border Protection establishes a process to apply tariffs. That kind of tells you while he preaches its easy for the camera, he knows off camera that its not. But that certainly does not mean not doable.
Its interesting because vehicles are already supposed to be labeled with what is made where, but the US gov't cant do that effectively currently based on current tracking systems so they use various approaches and they just consider domestic as a geographic concept rather than strictly by nation.
Then if you go look at the US Dept of Transportation report on domestic car content, they lump Canada and the US together.
Someone is going to make some bank developing a system that works to distinguish between nations for something as intertwined / integrated as autos with thousands and up to tens of thousands of individual parts.
This post was edited by SBD on Mar 28 2025 08:03am