On Wednesday, March 26, President Donald Trump signed an executive order to impose 25% tariffs on all imported automobiles and auto parts. His administration has stated that these measures will enhance U.S. national security and revitalize domestic manufacturing. However, the tariffs are expected to create significant challenges for automakers, affecting production costs, supply chains, and pricing strategies.
Internal memos obtained by the Detroit Free Press reveal how two of the country’s largest automakers, General Motors and Ford, are responding. Both companies acknowledge the potential disruptions to their operations and reassure employees that they’re actively working on strategies to mitigate the impact.
In an interview with NBC News on Saturday, President Trump addressed potential price increases, stating that higher costs for foreign-made vehicles could encourage more Americans to purchase more domestically manufactured cars.
However, the reality is more complex. Very few vehicles sold in the U.S. are entirely American-made. Even models assembled in the United States rely on imported components, including critical parts such as engines, transmissions, and raw materials. Ford Motors best-selling F-Series Super Duty pickup is final assembled in Kentucky. However, its V8 engine is imported from Canada and Mexico. General Motors faces similar challenges, with nearly half of the vehicles it sells in the U.S. being imported.
Hours before Trump signed the executive order, GM CEO Mary Barra and Ford Executive Chair Bill Ford made last-ditch efforts to discuss potential alternatives with the White House. While their appeals were unsuccessful, they will continue to engage with policymakers in Washington.
Despite the uncertainties, both automakers are urging their workforces to remain focused as they continue to work to position themselves to weather the storm.
