Automakers Gear Up As New Tariffs, EV Policy Changes Loom Under Trump Administration

Automakers are gearing for President-elect Donald Trump to implement new tariffs on vehicles imported from Mexico and possibly other nations. In addition, industry associations and executives are anticipating a rollback of numerous current pro-electric vehicle policies.

Trump recently said that he would slap a 25% tariff on Mexican imports if the country doesn't stop migrants and drugs from coming into the United States.

"If they don't stop this onslaught of criminals and drugs coming into our country, I am going to immediately impose a 25% tariff on everything they send into the United States of America," Trump said earlier this week.

In addition to the tariffs on Mexico, the Republican leader has expressed his intention to reverse pro-electric vehicle policies and rescind regulations enforced by the Environmental Protection Agency and the Transportation Department on his first day in office. He also aims to reduce or eliminate tax breaks and other incentives for electric vehicles, Reuters reported.

Since Jan. 1, the U.S. government has issued more than $2 billion in point-of-sale tax credits to consumers for the purchase of over 300,000 clean vehicles as part of its efforts to accelerate the clean energy transition.

This year, the country has experienced a significant increase in electric vehicle (EV) adoption since new tax credit rules took effect this year. Out of 300,000 plus advance payments that have been issued, more than 250,000 are for tax credits related to new EVs valued up to $7,500 and around 50,000 for used vehicles with rebates of up to $4,000, according to the U.S. Treasury.

The Zero Emission Transportation Association on Wednesday expressed its readiness to work with the president-elect, emphasizing that the "next four years are critical to ensuring that these technologies are developed and deployed by American workers in American factories for generations."

The association includes Elon Musk's Tesla, Rivian, Lucid, and battery maker LG.

According to industry watchers, Trump's win over rival Kamala Harris has led to uncertainty regarding the Detroit Three's ambitions for an all-electric future. However, many believe Trump's administration may benefit domestic automakers, as he is expected to alleviate some environmental regulations that have pushed these companies to hasten their shift toward electric vehicles.

Trump previously promised 200% tariffs on vehicles imported from Mexico. That came after promising 100% tariffs at one point on cars built in Mexico. He has made tariffs a key element of his economic plan, claiming it will pay for more tax cuts.

Supporters claim that tariffs will spur companies to build products in the United States but that process would not occur quickly.