🤢 Yuck, Politics.

The Gist

Tariffs, EV rollbacks, and supply chain chaos—welcome to the latest round of auto industry whiplash. Trump’s 25% import tax on Mexican & Canadian vehicles (currently on pause) could cost automakers $40 billion a year and add $3,000+ to new car prices. EVs aren’t safe either—tax credits are on the chopping block, and federal charging station funding is frozen. Meanwhile, China tariffs are set to drive up parts costs. Dealers, expect pricing volatility, shifting inventory strategies, and plenty of unpredictability.

Sometimes we say “bull,” and sometimes we talk about “bears,” but in truth, the market is more like a deer. The second it gets wind of something to panic about, it does. Unless, of course, it is a half-ton of metal attached to two bright lights, then it seems to have time to stand around. (Wow, this metaphor worked out even better than I had hoped)

First, the Short Version:

• 25% tariffs on Mexican & Canadian auto imports? On hold for a month, but still looming.

• $40 billion a year in added costs for automakers, which will trickle down to dealers and consumers.

• EV incentives & infrastructure? Getting axed, which could slow adoption and shake up sales strategies.

• China tariffs? More pain for parts, batteries, and imported models.

Trump’s Auto Industry Gambit: What’s Already Happened, and What’s Next

If you thought the auto industry had finally found some post-pandemic stability, think again. The Trump administration is shaking things up, and the impact on car dealers is just getting started.

Tariff Turmoil: A $40 Billion Punch to the Gut

President Trump’s proposal to slap a 25% tariff on vehicles and parts from Mexico and Canada has the entire industry scrambling. Right now, it’s delayed for a month, but if it goes through, we’re looking at:

• $110 million per day in added industry costs.

• New car price hikes of $3,000 or more—not exactly what consumers want to hear.

• Major disruptions to the supply chain, since 60% of U.S.-built vehicles rely on imported parts.

Even Ford, which has a heavy U.S. manufacturing footprint, expects earnings to drop by $2-3 billion next year. Stellantis, GM, and VW—who rely more on Mexican and Canadian plants—are bracing for worse.

And it’s not just carmakers feeling the pinch. Suppliers have already started adding “tariff fees” to invoices, expecting that automakers will pass those costs down the line. And if automakers eat the cost? That means lower profit margins and less room for dealer incentives.

EV Industry: Welcome to the Cold Shoulder

If the tariffs weren’t enough, Trump is making it clear he’s not in the business of boosting EV adoption.

• EV tax credits? On the chopping block. Eliminating them could tank EV sales by 27% according to industry analysts.

• $5 billion for public EV charging stations? Funding frozen. The NEVI program, which was supposed to build a national network of chargers, is now on hold while Trump’s team “re-evaluates” (read: considers canceling it).

• Tesla’s surprise position? Elon Musk supports cutting EV incentives, believing Tesla can survive while legacy automakers struggle. But Tesla has still collected $31 million in government funds for its Supercharger network—a setup that might not last under Trump.

China Tariffs: The Hidden Cost Bomb

It’s not just North American tariffs that dealers need to watch. Trump is slapping an extra 10% tariff on Chinese imports, which might sound like a “small” issue—until you realize China is a major player in EV batteries and auto parts.

• $10 billion per year in imported auto parts could get hit with extra costs.

• Vehicles like the Lincoln Nautilus and Buick Envision—two of the biggest U.S.-sold, China-made models—are now a lot more expensive to bring stateside.

• Even domestically assembled EVs contain critical Chinese components, making this a supply chain headache that could drive up costs across the board.

The Big Picture: What Dealers Need to Watch

1️⃣ Pricing Volatility. With tariffs, inflation, and supply chain issues, expect new car MSRPs to keep climbing. Affordability is already a concern, and now it’s going to get worse.

2️⃣ EV Slowdown. If incentives are cut and infrastructure projects stall, EV demand might drop, and that could mean a shift back toward ICE-heavy sales strategies.

3️⃣ Inventory Shakeups. Automakers will need to rethink production locations, which could lead to temporary shortages or model adjustments. Dealers might want to stock up now before supply chains get weirder.

4️⃣ Government Uncertainty. Whether it’s trade policy, EV regulations, or emissions rules, Trump’s second term (if it happens) will bring unpredictable shifts. The industry has already been whiplashed once—we could be in for round two.

Buckle Up—Wait, Scratch That.

The Trump administration’s policies are reshaping the auto industry in real time. Whether it’s tariffs, EV regulations, or China trade wars, dealers are on the front lines of the biggest industry shake-up in years.

So, what should dealers do?

• Keep an eye on inventory pricing—MSRPs are likely going up, and incentives might shrink.

• Watch how EV demand shifts—if incentives disappear, ICE sales might get a second wind.

• Stay updated on tariffs & policy changes—because if we’ve learned anything, it’s that nothing stays set in stone for long.

One thing’s for sure—this ride isn’t slowing down anytime soon.

Sources:

• Reuters “Trump tariff drama carries high stakes for US automakers, car buyers”

• Fox Business “Automotive groups react to Trump tariffs on imports from Canada, Mexico, China”

• The Verge “Trump administration halts $5 billion EV charging program that benefited Tesla”

• CNBC “Trump’s China tariff increase will affect Ford and GM vehicles, billions of dollars in auto parts”

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