As we have already mentioned in other articles, the tariffs imposed by Donald Trump on Canada and Mexico will cause significant problems for American automakers such as Ford and General Motors. Not only that, because the list also includes Stellantis, which produces about half of the vehicles exported to the United States in Mexico and Canada. According to forecasts by Barclays analysts, the 25% tariffs will cause serious economic damage to these three automakers.
Tariffs on Mexico and Canada are a major problem for Stellantis, Ford and General Motors
One in four cars sold in the United States is produced in Mexico or Canada. Consequently, Barclays has determined that the market has underestimated the extent of the damage that tariffs could cause. According to estimates, each car could face additional costs of $3,000.
“Without any adjustment, we estimate that it could wipe out all profits for Stellantis, Ford, and General Motors,” they write in their report. We are therefore talking about a significant problem that, without proper measures, could cost both manufacturers and consumers dearly. Usually, manufacturers, considering design and development, have very low profit margins, often single-digit.
Tariffs this high, if in force for a long time, could cause structural damage to the entire automotive sector, which could become financially unsustainable. Stellantis has not commented on these measures, while Ford and GM have raised the alarm about the negative repercussions of the measure, emphasizing how these measures could inflate production costs on American soil and compromise investments intended for American workers.
As a preventive measure, Ford has already implemented temporary countermeasures, including increasing inventory. Jim Farley, the company’s CEO, did not mince words: “If the tariffs were not just a strategic move to quickly obtain concessions from Canada and Mexico, but were maintained steadily, the impact for the sector could prove devastating.”
Barclays analysts believe it unlikely that such high tariffs will be maintained long-term: “Given the potential for significant disruption in the future if tariffs were to remain in effect, we believe this reminds us why tariffs of this magnitude are unlikely to remain in effect.” However, they warn that even a reduction in rates would have consequences: “Even if tariffs were reduced to something more modest, it would still end up increasing vehicle costs, likely causing inflation.”