Metal Boring Machines
Sourcing Guide & Market Intelligence

Tariffs on Chinese imports to impact vehicles and auto parts

• In February 2025, the Trump Administration imposed an additional 10.0% tariff on all imports from China with no exemptions or exceptions, and in March 2025, the tariff was doubled to 20.0%. In addition, the de minimis shipping exemption for imports under $800 was suspended, exposing these imports to all applicable tariffs; however, the repeal is paused currently until procedures and systems are properly in place.
• According to GlobalData, China-made vehicles represented 0.6% of new vehicle sales in 2024, indicating the impact of additional tariffs will be minimal. However, US auto parts imports from China are estimated to be $15.0 to $20.0 billion annually, according to the US International Trade Commission, indicating a larger impact on the vehicle and parts supply chain.
• While the impact of tariffs on China imports is still being evaluated by US companies in the vehicles and parts industry, companies reliant on parts from China will face higher costs, which could be passed on to buyers. The United States is China’s largest export market for auto components, and these parts (including but not limited to wheels, windshield wipers, air bags, air filters, catalytic converters, mufflers, radiators, brake systems, steering and suspension components, and electric and electronic equipment for vehicles, etc.) included are integrated into global supply chains.
• In retaliation, China imposed an additional 10.0% tariff on imports of vehicles and pickup trucks from the United States in February 2025. While US manufacturer exports to China in vehicles are minimal, some companies, like General Motors and Ford, with operations in China may be negatively affected by the increased cost of their products.
• The imposition of retaliatory tariffs by China is expected to lead to a further escalation in tariff rates after the Trump Administration announced plans for a new 25.0% vehicle, light truck, and auto part tariff in April 2025.

Canada and Mexico tariffs to negatively impact the vehicles and transportation sector

• On March 4, 2025, the United States imposed a 25.0% tariff on goods imported from Mexico and Canada, which applies in addition to other duties or fees that are in place. However, as of March 6, 2025, US automakers compliant with the United States-Mexico-Canada Agreement (USMCA) will be exempt from all tariffs until April 2, 2025.
• After the tariff took effect, Canada immediately imposed 25.0% tariffs on goods imported from the United States. President Trump announced a 25.0% tariff on all cars and light-duty trucks imported into the United States from any country.
• According to the United States International Trade Commission, Mexico and Canada account for 47.4% of motor vehicle imports to the United States, and 54.1% of motor vehicles bodies and parts. According to Anderson Economic Group (AEG), a Michigan-based economic consultancy, the broad-based 25.0% tariff could raise new car prices by $1,000 to $4,000, and up to $10,000 if manufacturers are unable to mitigate the tariff’s impact.
• Around half of the vehicles and light trucks exported by Mexico to the United States were manufactured by the largest three Detroit-based automakers (GM, Ford, and Stellantis). Other automakers to be impacted include Honda Motor, which sells 80.0% of its Mexican output in the United States, BMW, where nearly all Mexican output is exported to the United States, and Volkswagen, which exported nearly 350,000 cars to the United States that were manufactured in Mexico.
• According to Telemetry Insights, many auto parts suppliers will be unable to absorb the tariffs or make adjustments to mitigate the tariff impact (e.g., relocating their facilities or splitting efforts across three countries). With the introduction of 25.0% steel and aluminum tariffs for Mexican and Canadian imports on March 12, 2025, and the interconnected nature of vehicle/automotive supply chains (components may cross the US-Canada and US-Mexico borders up to eight times before final assembly), tariff-related costs could drive up production costs further.

Construction activity slumps as interest rates remain high

• During the last three months, total construction spending inched downward by 0.4%, driven by a more sizable 1.0% decrease in private construction spending. However, public construction spending rose by 1.5% during this period.
• Despite recent federal funds rate cuts, interest rates for consumers and businesses have climbed in the last month as increased economic risk has counteracted the lower borrowing costs faced by banks.
• Elevated interest rates weaken construction demand because they increase construction project financing costs. Thus, high interest rates have continued to reduce private construction activity, which is the segment most exposed to interest rate shifts.
• As a result, demand for products and services related to construction is currently weak. However, increasing public sector construction spending is adding to demand in a few construction markets, such as utilities and infrastructure construction.