Auto Industry Avoids Shutdown as Tariff Exemptions Ease Pressure, but Uncertainty Looms
Three months after the U.S. enacted 25% tariffs on global vehicle imports, the North American auto industry continues operating with only a slight production slowdown, avoiding the predicted shutdowns thanks to key exemptions and limited implementation of the tariffs.
Though the White House initially threatened sweeping levies, it ultimately excluded most auto parts—especially those compliant with the USMCA or sourced domestically—mitigating major supply chain disruptions.
Industry leaders credit intense lobbying and economic realities for preventing harsher measures, though long-term uncertainty has led to delayed investment and strategic planning across the sector.
Automakers have managed the impact by adjusting pricing, incentives, and vehicle content. Still, looming threats of expanded tariffs, including a proposed 35% duty on Canadian imports, keep the industry on edge as high-stakes trade negotiations continue.
Experts warn that failure to reach a new trade accord could harm both U.S. and Canadian auto sectors significantly.
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U.S. EV Sales Dip in Q2 as Incentive Phase-Out Looms and Market Matures
New electric vehicle (EV) sales in the U.S. fell 6.3% year over year in Q2 2025, totaling 310,839 units, despite rising 4.9% from Q1 and setting a record for first-half sales at over 607,000 units.
Auto Industry Holds Steady Amid Rising Canada-US Trade Tensions
The Canada-US trade conflict remains unstable, with a new threat of 35% tariffs on potentially non-CUSMA Canadian goods adding to uncertainty. The automotive sector, a frequent target in this dispute, continues to face challenges. In response to U.S. tariffs, Canada imposed counter-tariffs on U.S.-built light vehicles on April 9, 2025, but granted confidential Remission Orders to five automakers that build vehicles in Canada.