A review of the likely impact on the auto industry of the presidential election is challenging to produce.

That’s because the cautious campaign of vice-president Kamala Harris has had little to say on the U.S. auto industry, which leaves us to guess that she’s probably anticipating preserving the status quo, which is currently modestly strong.

Former president Donald Trump, on the other hand, has been outspoken about the auto industry but has said so much that his remarks frequently conflict, leaving us to wonder where in the bombast and hyperbole his real policy goals lie.

Here’s what we do know: While he was president between 2017 and 2021, Trump applied tariffs on imports. And during Harris’s service in the Biden administration, those tariffs were left in place.

Trump tariffed materials used by the U.S. auto industry, such as a 25 percent tariff on steel and a 10 percent tariff on aluminum. The specifics of which countries received waivers and quotas shifted through the course of his administration.

In 2022, the Biden administration dumped these tariffs in favor of a quota system that eliminates direct tariffs but also induces supply-constrained price increases that still add cost, according to The Tax Foundation. That organization estimates that steel and aluminum tariffs amounted to $2.7 billion in added cost.

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The organization points out that “historical evidence shows that tariffs raise price and reduce the available quantities of goods and services for US businesses and consumers.” They cite an analysis showing that steel-consuming jobs outnumber steel-producing jobs by 80-to-1, indicating greater job losses than gains from steel tariffs.

“For both camps, jobs are a critical aspect and both administrations are keen to implement policies that ensure job security and growth,” Abey Abraham, Managing Principal of Ducker Carlisle in Troy, Michigan, told Design News via email.

What Next?

“We are paying careful attention to the approach both candidates might take,” said General Motors CEO Mary Barra during the third quarter earnings call with analysts. “I’m not going to speculate on what each might do, but what I will tell you is that we have and will continue to engage constructively with the policy-making process regardless of the election outcome.”

Because the Harris campaign has had little to say specifically about tariffs that would affect the auto industry, we can probably expect similar policies as the Biden administration has employed over the last four years.

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“There will probably be no pullback on tariffs,” said Charles Klein, the Station Manager for OEC Group’s Detroit office. “As we know, when tariffs come in, they don’t go away.”

The most egregious example of this in the auto industry is the so-called “chicken tax” 25 percent tariff on imported compact pickup trucks, as described by the Tax Policy Center. It was a retaliatory move by the US in response to a German tax on US chicken exports in 1964 that remains in place today. Volkswagen was the intended target at the time, but it has even affected Ford, which imported the Transit Connect commercial van from Turkey with unneeded rear seats installed so it wouldn’t be considered a truck.

While the Biden administration inherited tariffs from the Trump administration, they did add some tariffs to the automotive industry. “More EV tariffs have come in, so we have some indication that Democrats are more open to tariffs now," Klein said. "It seems like they have warmed to this revenue stream.”

Biden enacted a 100 percent tariff on Chinese-built EVs in response to that country’s trade obstacles and subsidies for its domestic EV makers. Today, the combustion-powered Buick Envision and Volvo S90 and the Polestar 2 EV are the only Chinese-assembled cars sold in the US. Ford CEO Jim Farley has been visible on social media, discussing the Chinese Xiaomi SU7 EV that has been his daily driver for six months, as he gathers competitive research on Ford’s future rivals.

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Trump’s Plans?

Trump has been vocal about his desire to increase tariffs on imported goods, but hasn’t been clear on what those would be exactly. “The numbers can change,” Klein noted. “When Trump was president, the numbers changed too. We’ve had pretty much every percentage, right?”

The former president is talking about a blanket 10 percent tax on all imported goods. Haver Analytics reports that about one-quarter of the parts that are used to assemble US-made cars and trucks are imported, making them subject to the blanket tariff.

That would be a big deal, Klein said. “A [combustion] engine has 3,000 moving and stable parts. A lot of those parts come from China.”

Preston Caldwell, senior U.S. economist for Morningstar Research Services LLC, estimates that there is a 7.5 percent probability that a re-elected Trump could get the 10 percent uniform tariff hike he seeks. He calculates that there is only a 15 percent chance that Trump will actually follow through with this, and only a 50 percent likelihood that he will succeed if he does. “There’s a high likelihood that this 10 percent tariff talk is mere bluster,” Caldwell wrote on the company’s blog. “He talked about similar tariffs during his first term, but they were never seriously pursued.”

What About Mexico?

Trump has also floated the notion of a 60 percent tax on goods from China and Mexico. He has spoken about concern that Chinese automakers will set up shop in Mexico as a way to circumvent tariffs on Chinese goods. As with the Chicken Tax, domestic carmakers could be collateral damage from a tariff on Mexico-built vehicles, as all three companies assemble cars for the US in Mexico.

“We expect massive pushback from business groups because of China’s likely retaliation, not just on US exporters but also on US firms operating within China,” Caldwell stated. Morningstar judges this outcome as having a 32 percent probability, based on a 40 percent chance that Trump will actually attempt to enforce such a tariff and an 80 percent likelihood of him succeeding.

The US-Mexico-Canada (USMCA) trade agreement is subject to renewal in 2026 and the new president will set the tone for that discussion. “Both administrations would likely want to ensure some level of additional policy that would be aimed at limiting the potential impact of Chinese BEVs entering the US market with policy that would ensure minimum USMCA content in these vehicles in addition to other proposed tariffs,” observed Abraham.

Additionally, he points to concern about Chinese electronics, in the form of telematic control units that could be made in Mexico by Chinese companies. “We would likely anticipate seeing policy positions expanding limitations on Chinese-sourced Telematic Control Units (TCUs) to a broader set of control units that need to be manufactured and supplied by USMCA-based suppliers,” Abraham said.

What About EVs?

While Trump has been consistently anti-EV, the arrival of his highest-profile supporter, Tesla boss Elon Musk, will likely temper any moves by a potential president Trump to obstruct EV adoption. “Musk’s close ties with the Trump administration may alleviate potential disruptions that would otherwise come from the Trump administration related to the EV market, particularly the Inflation Reduction Act (IRA) polices,” he added.

Federal support for the continued rollout of EV charging stations could be at risk, however, Abraham pointed out. “Under the Biden/Harris administration, there is approximately $7.5B allocated for charging networks; however, the reality is that very little has been deployed to date,” he said. “A potential Harris administration would likely address this to understand the bottlenecks and help build this out faster/further – to encourage faster consumer adoption and acceptance of BEVs.”

Trump, on the other hand, seems unlikely to press this issue, unless perhaps his ally Musk convinces Trump to steer that spending to Tesla’s Supercharger network now that Tesla’s North American Charging Standard (NACS) has become the de facto charging standard. Trump could also decide to cap the number of cars that are eligible for the IRA tax credit on EV purchases, Abraham suggested. “Once the vehicle threshold is reached, we may see funding for the IRA reduced or limited,” said Abraham.

Conclusion

The inertia of industry investments and factory construction dictate that the move to EVs could be slowed if Trump is elected, but ultimately the industry will likely continue on its current course, Abraham said. “These investments are part of a longer-term planning cycle that may show some micro-movements, are in place in the long run,” he said. “In some instances, we may see OEMs extend existing vehicle platforms by one or two years to align with policy and consumer demand; however, in the long term, we anticipate EV adoption is already in motion and although delayed, will continue down that pathway.”