Recently, U.S. President Donald Trump signed an executive order announcing a 10% tariff increase on all Chinese goods exported to the U.S. and a 25% tariff increase on goods imported from Mexico and Canada, with a 10% tax increase on Canadian energy products. This trade protectionist measure has sparked widespread controversy in the international community and within the United States, and has had a far-reaching impact on the global automotive industry.

China responded swiftly by announcing that from 10 February 2025, it would impose tariffs on certain imports originating in the United States, including a 10 per cent tariff on large-displacement cars and pickup trucks. The move shows China's determination to firmly defend its legitimate rights and interests and take the US tariff measures to the dispute settlement mechanism of the World Trade Organisation (WTO).

Trump's tariff policy has dealt a serious blow to the North American auto industry chain. The North American automotive industry is highly integrated, and after the North American Free Trade Agreement and the U.S.-Mexico-Canada Agreement, the automotive industry chain of the United States, Canada and Mexico has formed a close interdependence over the past decades. Mexico, as an important export base for major automakers for the U.S. market, produces about 90 per cent of its cars for export, of which nearly 80 per cent are exported to the United States. Trump's tariff policy will undoubtedly pose an existential threat to Mexico's auto industry, and will also lead to a rise in the cost of car purchases for U.S. consumers.

A number of multinational car companies have expressed their concerns about the tariff policy. Ford CEO Jim Farley said that if the tariffs continue, they will have a huge impact on the industry and adversely affect U.S. jobs. General Motors has also said that the company may move some of its pickup truck production out of Mexico and Canada if tariffs are imposed. Volvo Cars, on the other hand, plans to make full use of its plant in South Carolina in the US to meet the tariff challenge.

In addition, Trump's tariff baton is aimed at the European Union. The news that he plans to soon impose tariffs on EU products immediately triggered stock market tremors, with shares of several European vehicle and parts makers quickly moving lower. The European Commission and a number of leaders claimed that if the United States imposes tariffs, the EU will respond firmly.

Trump's tariff policy not only exacerbated the risk of trade conflict, but also caused a serious impact on the global automotive industry chain. A number of car companies are facing production adjustments and cost pressures, while consumers are facing the challenge of higher car purchase costs. The international community generally opposes Trump's tariff policy and has taken countermeasures to safeguard its rights and interests.

Against this background, the global auto industry needs to find ways to mitigate the negative impact of the tariff policy. On the one hand, car companies need to strengthen international cooperation to jointly address the challenges of trade protectionism; on the other hand, governments also need to strengthen communication and consultation to find effective ways to resolve trade disputes. Only through international cooperation and joint efforts can we maintain the stability and prosperity of the global auto industry.

Comprehensively collated from China Automotive News