Just two days ago, President Trump took office for his second term. In these two days since his inauguration, he has already taken many actions in the directions he promised his followers he would go in. With the many executive orders that he is signing, many expect to continue to this trend of things being implemented that he said he wanted to implement. One such action that is one many American minds has to do with tariffs.

On the campaign trail, Trump said that he would instate a tariff on foreign goods as a means to regulate the economy. Now that he is in office, he has said that he still plans to instate a tariff, specifically a 25% tariff on goods imported from Canada and Mexico. He said that he plans to implement the tariff as soon as February 1. If he follows through with this plan, where does that leave the auto industry?

Many popular manufacturers import parts and vehicles themselves from Canada and Mexico.

Some of the most popular models of cars that have connections to Canadian and Mexican production are the Chevy Equinox, the Toyota Tacoma, the Honda Civic Sedan, and the Honda CR-V. It automobiles and auto parts fall under the goods that are tariffed, which many expect they will be, all these vehicles and more would likely be affected. The tariff would likely affect buyers as they would then see higher prices at dealerships due to the higher production costs. Not only that, but models in which they are not dealing with any goods imported from Canada or Mexico could have higher prices too, as often automakers price based on competition. They can still raise their prices and be viewed as a valid competitor if the others have even higher prices.

So far, there is no guarantee that a 25% tariff will be implemented.

When asked about a tariff, President Trump gave very non-committal answers. He expressed that they are talking about a 25% tariff on goods from Canada and Mexico and that they are thinking about February 1^st as the date. However, nothing has formally been signed. Additionally, no specifications to assure what goods would be affected have been said either. So, there is a possibility that no tariff will be placed on imported goods or even that one will be, but it will not affect the auto industry. Nonetheless, many manufacturers are preparing.

General Motors is one of the biggest manufacturers with a plant located in Mexico.

Other leading names in the industry, such as Ford and Toyota, have production plants in both Mexico and Canada. If this tariff does go into effect, the prices of these vehicles will steadily increase. Furthermore, there could also be a delay in production for a time, as manufacturers may try and find alternative solutions to avoid the tariffs. This could mean we will see fewer vehicles being produced in the coming years.