Sworn in on January 20, 2025, Donald Trump is here again and already making waves as America’s 47th President.
As a controversial president, his campaign promises and initial policy decisions have started sending shockwaves throughout many sectors with the automotive industry being included. And this has made many analysts and experts to predict its impacts on the global automotive industry.
As my memory would serve me, during his campaign period, he vowed to renegotiate or withdraw from existing trade agreements, for instance the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP). He has also proposed imposing tariffs on imported goods, which could raise production costs for European automakers like BMW and Mercedes-Benz. And these companies, without doubt, have significant investments in the US and rely heavily on imports of parts and components.
The proposed tariffs will definitely have major impacts on the global supply chain. Reason being that many automotive components are sourced from countries like China, Japan, and South Korea and these countries would most likely be subjected to tariffs too. A deeper look at this means that it would lead to increased costs and potential disruptions to production. Automakers may also be forced to reassess their supply chains and consider sourcing components from countries that are not subject to tariffs.
With Elon Musk (an electric car producer) as one of his right men, Trump’s stance on electric vehicles (EVs) is also a concern for the industry. During his campaign, Trump expressed skepticism about the viability of EVs and even proposed to rescind unspent funds from the Inflation Reduction Act. A simple analysis of this means that his would have an effect on the EV cars like Tesla in the US and in the world at large. And many European auto-companies like Volkswagen and BMW which have invested heavily in EV technology and are counting on the US market to drive sales would be greatly affected.
Well, developing nations developing Nations like Nigeria with local automakers like Innosson may benefit from this tariff-based policy, since they’ll want to respond by also slamming high tariffs on cars and other products that would be imported from America to their countries, and as a result, this will encourage the citizens of these developing countries to patronize locally-made cars.
It is worthy to note however, that as an influential world leader, the implications of his presidency extend beyond the US. European automakers, especially those with significant investments in the US, could face significant challenges. The UK’s Society of Motor Manufacturers and Traders (SMMT) has called on the government to work with the Trump administration to find a solution that supports sector jobs. The SMMT has also warned that a “hard Brexit” could exacerbate the challenges faced by the industry.
To surmise, the challenges posed by Trump’s trade and environmental policies would have an effect or face uncertainty about the future of autonomous vehicles. Since his administration has yet to articulate a clear policy on autonomous vehicles, which could create uncertainty for companies investing in this technology. Companies like Waymo and Tesla are at the forefront of autonomous vehicle development, but they need clear regulations and guidelines to continue investing in this area.
Babatunde Yusuf is the CEO of Mapleby Autos
