Is a Tariff Winter Ahead for Auto, or Just a Chance of Flurries?

March 5, 2025

S&P Mobility analysts calculate the likelihood of three distinct scenarios.

Editor's note: On Wednesday, March 5, the White House said it will not levy tariffs on auto parts crossing U.S. borders with Canada and Mexico until April 2, giving the three nation's a one-month reprieve.

On March 4, President Donald Trump dropped the hammer and imposed promised tariffs on goods from Canada, Mexico and China. Both Wall Street and the U.S. auto industry immediately went into panic mode. The stock market tanked and auto executives did some frustrating math as they tried to figure out how to keep the ship aright (let alone profitable) with 25% tariffs on goods from Canada and Mexico and an additional 10% on China.

In a “Rapid Response” special report issued on March 4, S&P Global Mobility analysts predicted that within a week’s time, the tariffs “will significantly disrupt the economics of the region,” and estimated that North American auto production could drop by up to 20,000 units per day. S&P also calculated the probability of three scenarios, pegged to how long the tariffs continue: Quick Resolution, Extended Disruption and the ominously named Tariff Winter.

In a statement on March 5, MEMA, an association that represents automotive suppliers, said that the tariffs create "significant risk" to their members, "placing additional pressure on the already-fragile supplier industry and its ability to ... absorb the costs, grow and invest."

A February 1 MEMA survey of its membership found that:

82% of suppliers say tariffs on goods from Mexico will have a negative impact on their business. 
68% of suppliers say tariffs on goods from Canada will harm operations. 
During the first month of tariffs, suppliers anticipate: cutting or delaying investments (24%), modifying supply chains (21%), cutting U.S. jobs (13%) 
By six months, these impacts are expected to increase significantly: cutting or delaying investments (57%), modifying supply chains (75%), cutting U.S. jobs (47%), shifting production outside the U.S. (33%)

Click through the slideshow to view S&P's three scenarios and the probability that each will occur.

About the Author

Laura Putre | Senior Editor, IndustryWeek

As senior editor, Laura Putre works with IndustryWeek's editorial contributors and reports on leadership and the automotive industry as they relate to manufacturing. She joined IndustryWeek in 2015 as a staff writer covering workforce issues.

Prior to IndustryWeek, Laura reported on the healthcare industry and covered local news. She was the editor of the Chicago Journal and a staff writer for Cleveland Scene. Her national bylines include The Guardian, Slate, Pacific-Standard and The Root.

Laura was a National Press Foundation fellow in 2022.

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