Vehicle Manufacturers Eye Tariffs
Tariffs to Mexico and Canada are planning to go into effect on February 4th, 2025, the same day this article is published. With an increased cost in imports from the two neighboring countries, U.S. manufacturers are watching and planning their next moves.
Details
When it comes to the trucking industry, the biggest imports the United States of America pulls from Canada are aluminum, iron, and steel.
For Mexico, the biggest imports include rubber (for tires) and oils (for fuel).
A 25% increase on these various products will lead to somewhere around a 25% increase in the purchase price for a truck, all other things being equal. It does not take an economics expert to understand that supply and demand will come into play and fewer trucks will be sold.
However, there are two aspects that play into this trade war that do not make it as much doom and gloom as it may first seem.
Used Trucks
Unless the trucks are being traveled across international borders to be sold in the United States, the tariffs will have no direct impact on used trucks, as they are already built and ready to run within the United States.
While there is the effect of an added demand for used trucks causing an increase in price (supply and demand, of course), it is likely to be much smaller than the purported 25% increase that would come from the tariffs.
America Made
While we may get our steel, rubber, and other materials from our North American neighbors as it is right now, the United States is still an economic powerhouse in producing many of these goods. For instance, in 2022 the United States produced 82 million metric tons of the stuff. The same can be said for oils used both in the production and operation of trucks, while Canada has a larger pool of proven oil reserves, the United States is still in the top 10 of proven oil reserves. Even if the United States goes into overdrive with “drill, baby, drill”, the USA is still set to cover its own bases for at least the next five years as a conservative estimate.
Conclusion
All of this is to say that the tariffs likely will not have the major impact that fearmongers would like to say that they will, in hopes of stirring up controversy and obtaining clicks. Even if the United States were to go completely independent on oil production, it would still have around half a decade of its own supply, which is likely longer than Canada and Mexico can hold out before yielding in order to reopen unfettered access to our markets.
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