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Collins, perhaps caught off guard by the straightforwardness of his response, then pivoted to another concern: what about cars that are assembled in the U.S., but still contain foreign-made parts? Bessent was quick to point out that vehicles produced under the United States–Mexico–Canada Agreement (USMCA) would be exempt from the new tariffs. This includes many vehicles assembled in the U.S., as well as those from Mexico and Canada, which make up a significant portion of the North American automotive market. According to online marketplace Cars.com, over half of new vehicles in the U.S. have final assembly in the country, while around 19% come from Mexico, and 4.2% from Canada.
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This shift towards domestic assembly was already in motion before the new tariffs came into play. Honda, for example, recently announced that it would cancel plans to assemble its 2025 Civic in Mexico, opting instead to build the car in Indiana. Honda’s decision follows similar moves by Hyundai, which recently pledged $20 billion in investments to expand its domestic manufacturing footprint, and Stellantis, which is reopening a plant in Belvidere, Illinois to produce midsize trucks.
Despite initial concerns about the impact of tariffs, the stock market seemed to show little concern, with major U.S. automakers’ stock prices holding steady after the announcement. This suggests that the exemptions under the USMCA are providing some much-needed relief, at least for the largest players in the industry.
Peter Navarro, a former economic advisor under President Trump, weighed in on the broader picture, urging Americans to remain patient as the tariffs slowly take effect. In an op-ed for USA Today, Navarro argued that the tariffs are a necessary step to level the playing field, as foreign nations often use unfair trade practices to flood the U.S. market with subsidized vehicles and parts while blocking U.S. exports.
Navarro further highlighted the failure of the Biden administration to enforce the USMCA properly, which has allowed Mexico to emerge as a key player in the auto manufacturing world. “Mexico has become the new Michigan,” Navarro wrote, pointing to a growing “Motor City diaspora” in Mexican cities like Puebla, Ramos Arizpe, and Hermosillo, where major car manufacturers like Volkswagen, GM, and Ford have set up shop.
Navarro and other critics of the current administration argue that the decision to extend tariffs on both autos and auto parts is a direct response to the threats posed by foreign dominance in the industry. President Trump’s economic strategy was rooted in the belief that the loss of U.S. manufacturing capabilities was not just an economic issue—it was a matter of national security.
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“By extending tariffs to both autos and auto parts, President Trump is confronting this threat to America’s economic and national security,” Navarro wrote. “Powertrain design and production are not just technical challenges—they are strategic capabilities. Lose them, and we don’t just lose good jobs—we lose the industrial strength needed for national defense.”
While the outcome of this tariff strategy remains uncertain, it’s clear that the Biden administration’s decision to impose such measures is part of a broader effort to bring manufacturing jobs back to the U.S. Whether or not this approach will ultimately pay off is a question that will likely play out over the next few years. For now, both industry leaders and consumers will have to wait and see if these policies can successfully reinvigorate American manufacturing and shift the balance of trade in favor of U.S. workers.
