Washington Wants More American-Made Cars. Detroit Warns That’ll Cost Americans More

Detroit’s automakers have spent much of the past year absorbing tariffs, shifting production plans, and trying to cut costs. Now, they’re reportedly warning that the next version of the North American trade deal could make everything worse. The twist is that the companies most exposed may be the ones already doing the most manufacturing here.According to Reuters, Ford, GM, and Stellantis are preparing a lobbying push ahead of another round of U.S.-Mexico trade talks next month. Their main concern is a proposed requirement that a vehicle contain at least 50 percent U.S.-made content to qualify for lower tariffs, alongside a possible increase to the treaty’s current 75 percent North American-content threshold.A $2 Billion Problem On Top Of The Existing One

Two automakers reportedly estimate that those changes could add at least $2 billion in annual costs for each Detroit company. That would land on top of the tariffs already weighing on their balance sheets. GM expects tariff-related gross expenses of $2.5 billion to $3.5 billion this year, while Ford has pegged its net hit at roughly $1 billion. In other words, vehicle affordability would only take a bigger hit.Read: Detroit Wants To Ban Chinese Cars While Its Own Cars Run On Chinese PartsOn paper, forcing more production into the U.S. seems to make sense. The reality, though, is that cars require a massive amount of parts from suppliers all over the globe. Some of those come from America. Others come from Canada and Mexico, and plenty more from farther afield. Changing a tariff percentage doesn’t change where those suppliers are physically located. That said, it does create influence.Ford Reads The Room Ford has already made a very public gesture in that direction. The automaker said this week that it will move production of Lincoln models for the U.S. market from China to American factories, with CEO Jim Farley acknowledging that the company quickly realized the administration was serious about reshoring automotive work. That said, the Big Three have other complaints.Specifically, they say that their foreign competitors may have a cleaner path into the country. The American Automotive Policy Council says Japanese, South Korean, and European automakers exporting to the U.S. face a flat 15 percent tariff, while domestic manufacturers are navigating a messier web of levies on vehicles, parts, steel, and aluminum. That’s where all of this gets really strange. A deal initially intended to make North American production stronger could leave it less competitive.