• Detroit automakers warn proposed changes to the North American trade deal could add at least $2 billion in annual costs per automaker.
  • Washington wants vehicles to contain at least 50% U.S.-made content to qualify for lower tariffs.
  • GM already expects $2.5B–$3.5B in tariff costs this year, while Ford estimates a $1B hit.

A Costly Proposal

General Motors Co., Ford Motor Co., and Stellantis NV are bracing for a potential financial hit as the Trump administration pushes for stricter rules of origin under the United States-Mexico-Canada Agreement. According to people familiar with the matter, the proposed changes could require that at least 50% of a vehicle's content be made in the U.S. to qualify for duty-free treatment—a significant increase from the current threshold. The automakers warn that such a move could add at least $2 billion in annual costs per company, as they would need to retool supply chains and potentially absorb higher tariffs on parts sourced from Mexico and Canada.

GM has already flagged that it expects to incur $2.5 billion to $3.5 billion in tariff-related costs this year, while Ford has estimated a $1 billion hit. These figures underscore the mounting pressure on the Detroit Three, which are also grappling with the transition to electric vehicles and intense competition from Asian rivals.

Industry Pushback

Automakers argue that the proposed rules would put them at a competitive disadvantage compared to foreign competitors, who face lower tariff burdens. "We are deeply concerned about the potential impact on our operations and on the affordability of vehicles for American consumers," a spokesperson for Ford said in an emailed statement. GM declined to comment, and Stellantis did not respond to requests for comment.

The debate comes as USMCA renegotiation talks intensify, with trade representatives from the three countries meeting in Washington this week. The auto industry is a key battleground, with each side seeking to protect its own manufacturing interests.

Supply Chain Realities

Industry analysts note that meeting a 50% U.S.-content requirement would be challenging given the deeply integrated North American supply chain. Many components, such as engines and transmissions, are produced in Mexico and Canada and shipped across borders multiple times before final assembly. Retooling these networks would take years and significant capital investment.

"It's not just about the final assembly plant," said an industry expert who asked not to be named. "You have to consider the entire supplier base, and moving that is not a simple task."

Meanwhile, consumers could feel the pinch as automakers pass on higher costs. "If these tariffs are implemented, we could see price increases on many popular models," noted a senior analyst at a major bank.

Looking Ahead

Negotiations are expected to continue over the coming weeks, with automakers hoping for a compromise that balances domestic content goals with the realities of a global industry. Without a deal, the companies warn they would be forced to make difficult decisions about where to produce and how to price their products.

Correction: An earlier version of this article incorrectly stated that the proposed U.S.-content rule was 50% for all vehicles; in fact, it applies only to certain categories. The article has been updated to clarify.