President Trump’s 25% tariffs on goods from Canada and Mexico could be felt particularly acutely by automakers, as many vehicles are assembled across the borders of the US, Mexico, and Canada. Since the North American free trade zone was created in 1994, automakers have built complex supply chains to achieve economies of scale.
A vehicle is considered an import when it’s shipped to the US after final assembly in another country. However, with complex supply chains, it’s increasingly hard to say which vehicles are American-made and which are imported. The Trump administration has not yet elaborated on how tariffs would be applied to components like engines that were shipped across the border and then returned to the US.
For example, the 2024 Chevrolet Blazer is assembled in Mexico using US-produced engines and transmissions. Meanwhile, the Nissan Rogue S.U.V. qualifies as a domestically produced vehicle because it’s assembled in Tennessee, but only 25% of its content originates in the US. The threat of tariffs has automakers fretting, with Ford Motor’s CEO saying that a 25% tariff across Mexico and Canada borders would “blow a hole” in the US industry.
The impact on consumers is also unclear, as many assume their car comes from where it was assembled, not where its parts were sourced. A retired tech executive from North Carolina bought a Chevrolet Tahoe, which has about two-thirds of its parts made in Mexico and Texas. He didn’t mind the Mexican content, saying he would have bought the same vehicle if it was made in Mexico instead of Texas.
The number of imported vehicles sold in the US has remained relatively constant over the last 20 years, with dips caused by economic crises. The largest source is Mexico, followed closely by Japan and South Korea. As tariffs are applied, it’s essential to understand what constitutes an import and how it affects the industry.
Source: https://www.nytimes.com/interactive/2025/03/04/business/economy/car-tariffs.html