tariffs

25% Trump’s Tariffs Could Disrupt the U.S. EV Market

The electric vehicle (EV) industry in the U.S. has been experiencing a significant boom, with automakers rolling out new, more affordable models to meet rising consumer demand. However, this momentum could face a major roadblock due to former President Donald Trump’s recent executive orders imposing a hefty 25% tariff on all goods imported from Mexico and Canada. With the tariffs set to take effect on Tuesday, the auto industry—particularly the EV sector—could be among the hardest hit.

tariffs

The U.S. automotive industry is deeply connected to Mexico, with major manufacturers relying on Mexican plants for production and assembly. Vehicles such as the Ford Mustang Mach-E, Chevrolet Equinox EV, Blazer EV, and Honda Prologue are all assembled in Mexico, meaning they could see significant price hikes under the new tariffs. Even Tesla, which primarily manufactures its EVs in the U.S., sources various components from Mexico, making it vulnerable as well.

In 2023 alone, approximately 2.55 million cars built in Mexico were imported into the U.S., according to research firm GlobalFleet. A 25% increase in import costs could force automakers to either absorb the losses (impacting profits) or pass those costs onto consumers, making EVs more expensive. This could slow down EV adoption at a time when the U.S. is pushing for a greener transportation future.

The Brands and Models Most Affected

Several well-known automakers will feel the brunt of the tariffs, including:

  • Ford – The Mustang Mach-E, a popular electric SUV, is produced in Mexico, which means its price could rise substantially.
  • General Motors (GM) – Models like the Chevrolet Equinox EV and Blazer EV, which are part of GM’s push into the electric space, are also assembled in Mexico.
  • Honda – The upcoming Honda Prologue, a key player in Honda’s EV lineup, will be affected by the tariff as well.
  • Tesla – While Tesla’s final assembly occurs in the U.S., its supply chain still relies on parts from Mexico, potentially leading to increased costs.

With the tariffs in place, automakers might have to make tough decisions—either relocating production (which is expensive and time-consuming) or raising prices for consumers.


Model Year 2024U.S. or CanadaFrom MexicoFrom ChinaAssembly
Ford Mustang Mach-E26%18%51%Mexico
Chevy Blazer EV62%18%Mexico
Chevy Equinox EV62%18%Mexico
Honda Prologue38%16% Mexico
Acura ZDX63%19%16%U.S.
Tesla Model 335-75%20%40% (LR only)U.S.
Tesla Model Y70%20%U.S.
Tesla Model S65%15%U.S.
Tesla Model X60%20%U.S.
Cybertruck65%25%U.S.
Dodge Charger Daytona EV Canada
Ford Escape PHEV32%25%U.S.
Lincoln Corsair PHEV47%25%U.S.
Chrysler Pacifica PHEV0Canada
Audi Q5 55 e51%Mexico

Could Tesla Get a Pass?

While Tesla is not as exposed to these tariffs as some other automakers, it still faces potential cost increases. However, there is speculation that Elon Musk’s close ties to Trump could influence whether Tesla gets an exemption from these new trade policies. Musk, who heads the Department of Government Efficiency under Trump and has donated millions to his campaign efforts, may have some leverage in lobbying for more favorable terms.

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China’s Role in the EV Market

In addition to the Mexico and Canada tariffs, Trump is also set to increase tariffs on Chinese-made goods by another 10%, further complicating the situation. The U.S. has already imposed a 100% tariff on Chinese-made EVs and banned Chinese software in vehicles sold in the U.S. While this move is intended to protect domestic manufacturing, it also limits supply chain flexibility for automakers sourcing parts from China.


Impact of 25% Tariffs on EVs Imported from Mexico & Canada

AspectBefore TariffsAfter Tariffs
EV AffordabilityLower prices due to free tradeHigher prices due to tariffs on imports
Affected AutomakersGM, Tesla, Ford, Honda, BMW, AudiIncreased costs for these automakers
EV Models ImpactedFord Mustang Mach-E, Chevrolet Equinox EV, Blazer EV, Honda ProloguePotential price hikes for these models
Tesla’s SituationU.S.-based production but sources parts from MexicoHigher component costs, potential exemptions possible
China Tariffs100% tariffs on China-made EVsAdditional 10% tariff increase on Chinese goods
Industry ResponseHeavy reliance on Mexican manufacturingAutomakers may shift production to the U.S.
Hyundai & Kia StrategyPreviously imported modelsIncreasing U.S. production at Georgia Metaplant

How This Impacts Consumers

For car buyers, this could mean higher prices on some of the most anticipated EV models. If manufacturers pass these costs down, the affordability of EVs—a key factor in their growing popularity—could take a hit. The industry has worked hard to make EVs more accessible, but tariffs could slow down adoption by making them less competitive with gas-powered cars.

However, not all automakers will be equally affected. Japanese and Korean brands, like Toyota, Hyundai, and Kia, are slightly more insulated from the tariffs. While some of their parts still come from China or Mexico, Hyundai has recently shifted more of its EV production to the U.S. The Hyundai Ioniq 5, for example, is now manufactured at the Hyundai Motor Group’s Metaplant in Savannah, Georgia. More Hyundai and Kia EVs are expected to be built in the U.S. this year, helping them avoid the steep import tariffs.

A Turning Point for the Auto Industry

Trump’s tariffs could mark a turning point for the American auto industry. Automakers that rely heavily on foreign production may have to rethink their supply chains and invest in U.S. manufacturing to remain competitive. This could mean more jobs in the U.S. but also higher costs in the short term. The biggest question is whether consumers will still be willing to pay a premium for EVs, or if these added costs will slow down the transition to electric mobility.

As the tariffs take effect, all eyes will be on how automakers respond. Will they absorb the costs, shift production, or increase prices? One thing is clear: the road ahead for EVs in the U.S. just got a lot bumpier.

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