When Trump’s tariffs reach pay

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Just hours after its entry into force, President Donald Trump’s 25% tariff on imported cars has reverberated around the world.

Jeep maker Stellantis NV plans to temporarily stop some production in Canada and Mexico. Ford Motor Co. began offering huge discounts to get customers into the showroom. Volkswagen AG warned dealers that it would pay import fees for vehicles it ships to the U.S., while Toyota Motor Corp. cuts overtime fees at a factory in Mexico.

These moves suggest that the car tariffs that came into effect shortly after midnight in Washington had an immediate impact. Taxes are part of a broader trade war, and are expected to increase supply chains for most vehicle models and add thousands of dollars to costs.

Prime Minister Mark Carney announced Thursday that Canada’s plan is aimed at hitting a 25% retaliation tax on U.S.-made vehicles.

After trading began Thursday, automakers and other markets fell. General Motors Co. fell 3.3% at 11:03 a.m. in New York, Ford fell 4.4% and Stellantis fell 7.4%. Analysts expect Tesla Inc., an electric vehicle maker with relatively small impact on tariffs, to drop 6.9%.

Trump said the U.S. would impose a 10% tariff on each country exporting to the U.S., plus other duties targeting about 60 countries soon. While imported cars and parts are exempt from those so-called reciprocity tariffs, automakers have emerged from Trump’s escalating trade war.

“While the industry may feel it just dodged a bullet, we are still worried that vehicle and parts tariffs will stay here and add to the cost burden,” Bernstein analyst Daniel Roeska said in a notice to clients. Some auto parts will also be subject to a May 3 tax, according to a plan announced by Trump last week.

Officials say the U.S. will also maintain 25% tariffs on Canada and Mexico at 25%, and exemptions for goods compliant with the free trade agreement between the two countries will be retained indefinitely. These levies were originally intended to urge actions to curb the flow of fentanyl. If these initial taxes were abolished, countries would turn to a new tariff regime, officials said.

Car buyers have been rushing to the American entertainment room to lock in the deal and then go up from the tax. That brings sales in March to about 17.8 million vehicles, the largest number since April 2021, according to JP Morgan analyst Ryan Brinkman.

But as supply runs out, automakers are preparing for significant potential cost increases and supply chain turmoil.

Auto executives continue to lobby for the government’s restrictions on the consequences, with Ford, General Motors and Stralantis focusing their energy on excluding certain low-cost automotive components from tariffs.

Ford said Thursday that it offered discounts almost across the lineup, a way to get buyers into the showroom.

Ford’s “From the United States, the United States” discount program lasts until June 2 and offers employee pricing for everyone, reminiscent of the “Keep America Rolling” 0% financing offered after the September 11, 2001 terrorist attacks that boosted GM, which sets U.S. auto sales apart from the desolate economic economy.

Industry executives said they support Trump’s goal of building more vehicles in the United States and expanding manufacturing bases in the country. However, it can take years for mobile car assembly plants to take, and cash-strapped parts suppliers may never happen.

Stellantis, which owns brands including Ram and Chrysler, said it will suspend production for two weeks in Windsor, Ontario, starting Monday, citing uncertainty around tariffs. The company will also be idle at the Jeep factory in Toluca, Mexico, which makes the entry-level compass. These moves will also affect employees at multiple powertrains and stamping facilities in the United States.

A Stellantis spokeswoman said workers at all affected locations will be temporarily fired, including workers at several powertrains and stamping facilities in the United States.

“With new automotive industry tariffs now in effect, we will need our collective resilience and discipline to drive this challenging time,” Americas Chief Operating Officer Antonio Filosa said in a memo to employees. “We are continuing to evaluate the medium and long-term impact of these tariffs on our operations, but have also decided to take some immediate action.”

Alejandro Rangel, head of the Sitimm alliance, said Toyota has stopped working overtime at its factory in Guanajuato, Mexico. The factory makes Tacoma hybrid pickups and exports most of its production to the United States.

Meanwhile, Honda Motor Corporation is holding talks with workers to reduce or cancel the same state at its assembly plant over the next six weeks, which makes the same state as the HR-V small crossover, mainly for exports, Rangel said.

Representatives of Toyota’s North American business did not immediately comment. Honda’s North American unit did not immediately respond to a request for comment.

Langel said no further reductions in these plants are expected at this time, as demand for these vehicles exceeds the plant’s installed capacity.

“This is very important news in the region because we have 30 to 40 companies in each of these two auto factories and are direct suppliers to these factories,” Rangel said.

Jörg Burzer, head of production at Mercedes-Benz Group AG, said Thursday that the automaker is considering making more cars in the United States to deal with tariffs. According to Bloomberg, the company is also weighing whether to pull out the cheapest cars from the U.S. market, such as the GLA small SUV, as tariffs would make these vehicles economically unviable.

“We are still evaluating the impact of these tariffs,” Berzer said on a sideline at a corporate event in Stuttgart, Germany. “We have some plans, but flexibility is definitely key.”

Volvo Cars AB CEO Håkan Samuelsson also promised to increase the number of cars made in the U.S. and move another model to its South Carolina plant. He said in an interview Thursday that the Swedish automaker “will have to look closely at the models it will add to the production line.

Meanwhile, Volkswagen sent a memo to its U.S. dealers warning them about plans to increase the price of imported vehicles to the U.S. vehicles.

With the help of Chester Dawson, Alex Vasquez, Josh Wingrove, Meghashyam Mali, Rafaela Lindeberg, William Wilkes, Derek Wallbank and Keith Naughton.

This article was generated from the Automation News Agency feed without the text being modified.