President-elect Donald Trump plans to impose a 25% tariff on all imports from Mexico and Canada and an additional 10% tariff on imports from China beginning Jan. 20 — a move that the Auto Care Association (ACA) says “could lead to significant price increases for American consumers already feeling the sting of inflation.”

The proposed measures are aimed at addressing illegal immigration and drug trafficking, according to a Nov. 25 post by Trump on his Truth Social account. A post followed on Nov. 30 in which Trump stated he would impose a 100% tariff on imports from BRICS countries — Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates — unless a commitment is made to “neither create a new BRICS currency nor back any other currency to replace the mighty U.S. dollar.”

The Auto Care Association said Wednesday it recognizes the importance of addressing these issues but warns of the significant impact tariffs would have on U.S. consumers and the auto care industry. Tariffs of this magnitude on America’s largest trading partners could dramatically raise prices for U.S. consumers and U.S. businesses.

ACA noted in a press release that it has previously testified before the Office of the U.S. Trade Representative (USTR) about the negative effects tariffs have on the automotive aftermarket industry.

“Tariffs are not paid for by our trading partners; instead, they are passed down the supply chain and are a financial burden on families trying access affordable parts to repair and maintain their vehicles,” ACA wrote. “Delays in vehicle repairs and maintenance pose a safety risk for drivers, passengers, and pedestrians.

“Additionally, tariffs are a significant financial strain on businesses that must pay the tariff costs upfront, tying up resources and capital that would otherwise be used for other investments and growing the business. For small and medium-sized businesses, this could result in cash flow challenges, delayed payments, and reduced capacity and inventory causing businesses to scale back operations.”

According to ACA, Mexico and Canada accounted for 58% of U.S. auto parts imports and 76% of auto parts exports in 2023.

A trade relationship with Mexico and Canada through mutually beneficial supply chains ensures affordable parts are available to manufacturers, repair shops, and consumers, ACA wrote.

“The renegotiated United States-Mexico-Canada Agreement (USMCA) fosters beneficial trade and reduces barriers and economic growth between the three countries,” ACA wrote. “Supply chains between the U.S., Mexico, and Canada are highly integrated with components often crossing the border multiple times during production before it reaches the end user.”

ACA included an excerpt in its release from a June 2024 Congressional Research Service report on U.S.-Mexico trade relations that states “a significant portion of merchandise trade between the United States and Mexico occurs in the context of production sharing, as manufacturers in each country work together to create goods.”

“The flow of intermediate inputs produced in the United States and exported to Mexico and the return flow of finished products greatly increased the importance of the U.S.-Mexico border region as a production site,” the report says.

It also states that among major U.S. exports to Mexico last year was nearly $25 billion in motor vehicle parts.

According to ACA, the following categories include the top products imported from Mexico:

• • Ignition wire sets
  • Seat parts
  • Brake systems and components
  • Gearboxes
  • Catalytic converters
  • Suspension shock absorbers and parts
  • Spark-Ignition Reciprocating Piston Engines
  • Automotive air conditioning parts

And from Canada:

• • Spark-ignition reciprocating piston engines
  • Gearbox parts
  • Suspension system parts
  • Clutch parts

“A potential 25% to 100% cost increase for replacement automotive parts will likely drive the price of vehicle maintenance and repair up for consumers even further,” ACA wrote. “This would result in even more vehicles in operation on American roadways that are past due for service and in need of repair. With the sting of inflation still being felt by many Americans, the Auto Care Association supports the incoming Trump administration’s goal of achieving fair trade and we strongly encourage the incoming Trump administration to pursue trade measures that will help to lower everyday costs for Americans.

During a Dec. 10 panel discussion held in Detroit, industry executives discussed U.S. automaker competition with China and the issue of tariffs was brought up.

According to the Detroit Free Press, Ford Motor Co. Chief Economist Emily Kolinski Morris noted that economists don’t love tariffs.

“They can be a short-term tool, she said, as long as they aren’t relied upon for too long, one that offers an opportunity to protect a fledgling industry,” the article says. “As for the possibility of tariffs on products from Canada and Mexico, something President-elect Donald Trump as threatened, she described those neighboring countries as friends and she said she hopes that cooler heads prevail.”

In May, ACA President and CEO Bill Hanvey commended association members’ efforts to reduce reliance on Chinese supply chains but noted tariffs “continue to negatively impact our members and the automotive aftermarket industry.”

“Many products lack manufacturing alternatives outside of China due to infrastructure issues, significant investments in tooling, and the knowledge to produce a high-quality safety product,” Hanvey said in a written statement. “As part of the USTR [Office of the United States Trade Representative]’s recommendations, we urge the USTR to establish a comprehensive and transparent exclusion process that encompasses all products while renewing the existing exclusions that are set to expire at the end of May. We eagerly anticipate ongoing collaboration to uphold fair trade practices and to safeguard the interests of American workers and businesses.”

Hanvey’s statements were published on ACA’s website on May 14, the same day President Joe Biden announced 100% tariffs on Chinese electric vehicles (EVs), 25% on steel and aluminum, 50% on semiconductors, and 50% on solar panels. The tariffs, among others, went into effect Sept. 27.

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Featured image credit: Olivier Le Moal