Trump Has Made A Complete Mess Of Global Car Manufacturing

Donald Trump, a guy so nice America elected him twice, has made a complete goddamn mess of global auto manufacturing. Car companies around the world were counting on the U.S. to keep their operations in the green as intense competition in China and strict regulations in Europe made life harder for them. Now though, Trump's tariffs have thrown a wrench into all of that.

Since taking office a month ago today, the 47th president has had his sights aimed squarely on the U.S.'s $918 billion trade deficit. He wants to tackle this so-called problem with heavy tariffs – including a 25 percent tax on shipments from Canada and Mexico. He's also proposed specific tariffs for sectors like autos and semiconductors, according to the Wall Street Journal. Earlier this week, he said those tariffs could be "in the neighborhood of 25 percent," and they may even rise over time. He apparently added that there could be a grace period to give companies time to bring production to the U.S. This will all go very smoothly.

Here's more from the Wall Street Journal:

In response, automakers from Europe and Asia have been gaming out alternative manufacturing plans to remain competitive in a market that has become increasingly important.

"Things keep changing minute by minute, but our stance is to stay flexible and be able to be agile in reacting to the situation," Honda Executive Vice President Shinji Aoyama said last week.

Trump has long railed against auto imports, particularly from Europe. The European Union's 10% tariff on imported cars, compared with an equivalent 2.5% U.S. tariff, was one example of "lack of reciprocity" cited by the White House when announcing the reciprocal-tariff plan.

Last year, roughly half of the almost 16 million light vehicles sold in the U.S. were imported. Those imports were split roughly equally between assembly plants in Mexico and Canada—within the USMCA free trade area—and plants outside of North America.

The Big Three automakers – General Motors, Ford and Stellantis – and their suppliers are extremely reliant on shipping goods backs and forth across U.S. borders. The trio have lobbied the White House to keep trade barriers within North America to a minimum. Extending beyond North America – Japan, South Korea and Germany top the list of countries that U.S. automakers do business with.

Trump's aren't just messing with the Big Three though. Automakers around the world are now scrambling, as WSJ explains:

While the biggest Japanese brands started building local production networks in the 1980s, they still depend on shipping a lot of cars from home. Industry giant Toyota reported North American sales of roughly 2.7 million vehicles last year. Of those, about 2.1 million were assembled on the continent, including 1.4 million in the U.S., according to Wards Intelligence data.

Korea's Hyundai and Kia have grown rapidly in the U.S. in recent years, leaving them more reliant on imports than their Japanese peers, though they are also rapidly expanding production in America.

The Asian producers are highly dependent on American consumers. The U.S. accounted for a quarter of sales at Toyota, 29% at Hyundai and almost two-fifths at Honda in their most recent results.

Germany's carmakers are also increasingly looking to the U.S. as the Chinese market they once dominated becomes hyper-competitive. Volkswagen has been particularly vocal about its ambitions in the U.S.—the only big market globally where it has much headroom to grow.

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The fancier the European car brand, the more it typically depends on American consumers and the less on American production. Ferrari and Porsche sold roughly a quarter of their vehicles in the U.S. last year, all of them imported.

While Audi doesn't have a U.S. factory, Mercedes-Benz and BMW in the 1990s set up bases for making sport-utility vehicles in Alabama and South Carolina, respectively, that have grown into linchpins of their production networks.

Right now, tariffs are on hold until March. We should also learn more about tariffs on the auto industry specifically in early April, according to The Journal. That's around the time Trump told federal agencies with delivery reports to figure out how to implement reciprocal tariffs.

Anyway, that's enough out of me. Head on over to the Wall Street Journal for a more complete look at how car companies around the world are planning to deal with Trump's tariffs.