Trump Killing the American Auto Industry
By 
The U.S. auto industry was in big trouble even before President Trump imposed 50 percent tariffs on the profitable vehicles that the Big Three automakers produce in Ontario. Auto manufacturers make several trucks in Canada, including GM’s Chevy Silverado and Ford’s F-350 and F-450. These will now have to carry far higher sticker prices.
The negotiations collapsed after Commerce Secretary Howard Lutnick inserted himself in the final talks and declared that tariffs would not be cut on heavy trucks. Lutnick was already a particular nemesis for the Canadians. Last year, he said that he wanted to move auto production out of Canada and into the United States. At a U.S.-Canada summit, Lutnick told a Canadian audience that the United States was no longer interested in buying Canadian-made cars.
The problem, however, is that supply chains for U.S. auto producers go back and forth across the border, and are not easily disentangled. In addition to heavy trucks, which will now have to pay 50 percent tariffs, cutting severely into sales, the Big Three make several other cars and trucks in Canada, including the Dodge Charger, Chrysler Pacifica, and Chrysler Voyager. Under Trump’s retaliation, tariffs on cars and light trucks, which were “only” 25 percent, will rise to 50 percent on January 1 as well. Automakers will also pay 50 percent tariffs on Canadian steel and aluminum.
The whole point of NAFTA and its successor, the U.S.-Mexico-Canada Agreement (USMCA), was to create a seamless North American market for both production and consumption. In the case of production of cars, trucks, and parts, it is not possible to carry out Lutnick’s fantasy of unscrambling that egg without severely damaging the domestic auto industry.
These moves come on top of Trump’s perverse effort to destroy the auto industry’s necessary shift to EVs, which are already more efficient than cars powered by internal combustion engines. Based on his alliance with the oil industry, early in his second term, Trump killed several Biden clean-energy initiatives.
On Inauguration Day in January 2025, Trump signed the “Unleashing American Energy” executive order, revoking the federal target that EVs comprise 50 percent of new car sales by 2030 and freezing the $5 billion National Electric Vehicle Infrastructure program to create a national charging network.
In the One Big Beautiful Bill Act and subsequent legislative changes, Trump terminated the $7,500 tax credit for new EV purchases. This led directly to a sharp drop in planned EV investment in Georgia, South Carolina, and Arizona. Ford canceled production of its F-150 electric pickup truck; GM moved its Orion plant back to manufacturing heavy luxury gas-powered SUVs, and Stellantis abandoned its planned electric Ram truck.
I’ve said this many times and I think this will be the most likely future analysis of the Trump years–China was the big winner. China was already engaging in major advantages on the global auto market anyway, due to lower labor costs and vast reductions in the prices of its EVs. Now, Trump’s idiocy just is blow after blow to the American auto industry. Add to this that American auto makers are still obsessed with giant vehicles that are popular in the U.S. but don’t sell well in the rest of the world and you have a situation where the world is just moving on from American automobiles, as they are from a lot of American products. If nothing else, why would you want to deal with this utterly incoherent set of policies when you could just import inexpensive Chinese cars that are just fine? Consumers like them and from Mexico to Chile to Ireland, they are taking over the world. The future of Detroit is grim indeed.