March 26 set the wheels in motion, here’s what’s coming before tariff D-Day on April 2

President Trump’s March 26 tariff adjustment marks yet another disruptive jolt for OEMs, suppliers and logistics providers – intensifying pressure on vehicle trade and cross-border operations in an already volatile tariff landscape.

Here’s what we know so far, and what the industry should be preparing for.

The price of new tariffs

Cox Automotive warns that the new tariffs could immediately reduce North American vehicle production by as much as 20,000 units per day, or nearly 30% of daily output. Most factories depend on just-in-time shipments of parts – often from overseas or across the Canadian and Mexican borders. A sudden 25% tariff will disrupt this model and inflate component costs across the board.

According to S&P Global Mobility, these tariffs represent a “reset of the automotive value chain”, suggesting lasting structural impacts. Their forecast projects a significant drop in US light vehicle sales – from 16 million to 14.5-15 million annually – if the policy holds.

Bain & Company’s Automotive Practice concurs. In a March 26 briefing, Bain wrote that “tariffs are the latest disruption to hit a supply chain already stretched to its limits.” The firm urges OEMs and tiered suppliers to pivot toward more resilient sourcing models and regionalise production wherever possible.

Even for companies currently compliant under USMCA, the outlook is uncertain. With US-origin component deductions and non-US parts still subject to future tariffs, the rules may change midstream.

As Automotive Logistics’ Harrison puts it: “While the temporary reprieve for USMCA-compliant parts offers some time to adjust, their eventual inclusion in the tariffs will be immensely disruptive and damaging to US-Mexico cross-border trade flows. The North American automotive supply chain is fundamentally highly integrated, a structure that has been in place for around 40 years under the framework of the USMCA (formerly NAFTA). Trying to unravel and reshore those supply chains cannot be achieved overnight – it will take years, if not decades.”

Harrison adds that the staggered rollout of tariffs – first on finished vehicles, then components, followed by the eventual expiration of USMCA exemptions – “may seem merciful, but it merely means the impact will be more of a slow-motion car crash than one spectacular pile-up.”

What comes next?

Industry insiders are bracing for additional reciprocal tariffs – possibly within the next week. This means auto imports could face compounded duties, and tit-for-tat retaliatory tariffs from the EU, China and Japan could further restrict global vehicle flows.

“The US’s planned tariffs and retaliatory tariffs will upend the highly optimised and globalised automotive supply chain and result in very few winners,” said Harrison. “The impact will range from severe to potentially catastrophic for many OEMs and tier suppliers, who are already under pressure from the EV transition and increasing competition from China. We’re likely to see widespread supply chain disruption, major plant shutdowns or relocations, significantly higher vehicle prices (rising by $4,000-$12,000), and as a result, a sharp decline in both sales and production – resembling a Covid-style industry shock.”

J.D. Power already sees this ripple effect materialising. In a joint March 26 release with GlobalData, the firm reported a March sales bump – as consumers rushed to buy cars before expected price hikes. They noted that incentives were held flat in late March despite high inventory levels, due to uncertainty over incoming tariff-driven costs.

Meanwhile, AutoPacific’s president and chief analyst, Ed Kim pointed out that these tariffs may not stop competition from low-cost Chinese EVs. While duties might slow imports in the short term, cost and tech advantages will continue to favour aggressive global entrants – leaving US automakers in a tightening competitive vice.

In Europe, Harrison weighted in further: “The proposed 25% tariffs on all products imported from Europe to the US are particularly concerning, as they would significantly impact European exports. European OEMs currently send more than 20% of their vehicle production to North America. The effect on European production volumes – and both inbound and outbound logistics – could be severe, particularly for German and Italian OEMs. That said, many of these brands, such as VW, BMW and Mercedes, operate significant production facilities in the US, which are likely to benefit under such a tariff policy.”

Trump’s March 2025 tariff regime signals a new era for the US auto sector – one where geopolitics is driving supply chain structure. Multiple industry sources are warning that “bold moves” are now required to future-proof operations.

Harrison continued: “In terms of logistics impact, there will be an inevitable temporary ‘pull forward’ of finished vehicles and components – creating significant short-term demand spikes for inbound and outbound logistics providers, ports, terminals, yards, compounds and warehouses. But once the tariffs take effect, volumes are expected to fall sharply. The question then becomes: what next? If tariffs broadly remain in place – as many assume – vehicle volumes will remain lower across many routes, drastically impacting logistics flows and decimating revenues for logistics providers.”