Exclusive-Detroit automakers fear North American trade deal revamp could cost them billions

Detroit's automobile manufacturers are apprehensive that a revised North American trade deal may result in significant financial losses exceeding billions of dollars. These companies are already grappling with the impact of tariffs introduced last year, which have burdened them with additional expenses related to steel, aluminum, car parts, and vehicles imported from Mexico and Canada.

Industry observers note that foreign competitors from Japan, South Korea, and Europe are facing comparatively lower tariff burdens. A contentious issue for automakers is Washington's demand that vehicles comprise at least 50% U.S.-made content to be eligible for reduced tariffs. This requirement, along with a proposal to increase overall vehicle content in North America, could impose an additional $2 billion in annual costs for each Detroit automaker, according to estimates from two manufacturers.

The U.S. Trade Representative's office has declined to comment on the matter. Administration officials have maintained that their tariff measures aim to encourage more U.S. factory investment and job creation. Ford Motor Company anticipates that its tariff-related expenses will amount to $2.5 billion to $3.5 billion this year, potentially representing more than 20% of its operating profit.

In response to the tariffs, Ford has announced plans to relocate the production of Lincoln models destined for the U.S. market from China to American factories, citing the Trump administration's tariff policy as a key driver. Ford CEO Jim Farley acknowledged that the company may have been unprepared initially for the administration's commitment to boosting U.S. auto production.

U.S. Commerce Secretary Howard Lutnick expressed optimism that more automakers would follow Ford and General Motors in relocating factory operations to the United States. He highlighted the need for collaboration to achieve desired outcomes. The American Automotive Policy Council, representing Ford, General Motors, and Jeep-maker Stellantis, has cautioned that U.S. automakers are at a disadvantage compared to Japanese, South Korean, and European automakers exporting into the U.S., which currently face a flat 15% tariff.

General Motors CEO Mary Barra emphasized the company's focus on ensuring that U.S. automakers can compete effectively in light of the tariff rates imposed on European, Japanese, and Korean automakers.