One of President Trump’s key campaign promises was to bring more manufacturing production and jobs back to America, a goal Autos Drive America shares. Over the past sixty years, our members have invested a collective $109 billion in their U.S. operations, with tens of billions of dollars in additional investments planned over the next five years. However, smart trade policy is a critical part of increasing manufacturing on our shores. That means advancing policies that strengthen our role as a global manufacturing leader while also ensuring we remain open to trusted partners who help us grow production and career opportunities in the U.S. Those partners are an integral part of the U.S. automotive supply chain, providing raw materials and auto parts that help our members produce more than half the cars in the United States.
Broad tariffs risk undoing much of the manufacturing momentum we’ve built over decades by raising costs and slowing production at the very factories we want to expand. Autos Drive America recently partnered with GlobalData, a data and analytics firm, to look at how tariffs would impact the U.S. auto industry. We found that if tariffs increase costs on auto parts, U.S. light vehicle production could drop by 2.7% in 2025—a loss of approximately 270,000 vehicles. Less production could push factory utilization below 70%, far from the 80% benchmark for healthy output. This could mean stalled assembly lines, paused hiring, and delayed expansion plans. When companies are forced to spend money on additional costs due to tariffs instead of investing those funds into growing their U.S. operations, its American workers, families, and communities who feel the impact.
Our research shows that with 25% tariffs on imports from Canada and Mexico and 10% on all other imports, the average cost of a new car could jump by nearly 8%, or approximately $4,000 per vehicle. That’s a serious hit for working families already navigating affordability challenges. The result? Fewer affordable vehicles are on the market, which will disproportionately harm the average American family and young workers who depend on access to these vehicles as their means of transportation.
But the impact of tariffs doesn’t stop there. America’s auto industry is a vast network of local dealerships, suppliers, and service providers. When tariffs disrupt a supply chain that took the last 40 years to build, the ripple effects will spread fast and far. At dealerships, tighter supply and higher prices would shrink margins and reduce staffing. Parts suppliers, especially the small and mid-sized businesses sprinkled across the country, rely on seamless cross-border trade to stay competitive and cannot afford the severe cost increases tariffs would bring as stakeholders work to update their supply chains. Service providers will face added costs and delays in securing parts, affecting everything from repair timelines to customer satisfaction. Even insurers are likely to raise costs for consumers.
We must use every tool—including trade policy—to build more here at home, without turning away the partners who are already building here with us. That means using trade enforcement to strategically crack down on unfair practices while preserving strong ties with longtime allies and trusted partners. We also need to extend proven pro-growth policies like the 2017 tax reform, including full and immediate expensing, which powers new investment in U.S. facilities. And we must continue a robust trade partnership with our allies, including Mexico and Canada, to keep our supply chain running smoothly and ensure production costs remain affordable for manufacturers.
The United States needs a strong, resilient manufacturing sector. We should continue to invest in America’s domestic production capacity while maintaining our leadership as a destination for international investment. With the right approach, we can protect American workers, grow U.S. manufacturing, and keep our auto industry globally competitive for decades to come.
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