Trump is Learning Complex Supply Chains (Patreon)

As expected, Trump is stalling the tariffs on automakers...

Reason is simple. The auto industry in North America operates as a highly integrated system under the USMCA. Parts, components, and finished vehicles move freely across the U.S., Canada, and Mexico borders.

Many U.S. automakers (e.g., General Motors, Ford, Stellantis) assemble vehicles in the U.S. but rely on up to 70% of parts that are manufactured in Canada and Mexico, where labor costs are lower.

Canada and Mexico are also major exporters of finished vehicles to the U.S. A 25% tariff would significantly increase the cost of importing these vehicles and parts, raising production costs for U.S. automakers.

Ford and GM rely on 3% profit margins. 25% Tariff would destroy those two car companies over nite.

h/t Sanjay for the image!