This is the Cato Daily podcast for Wednesday, February 12, 2025. I'm Caleb Brown. As cars are constructed in North America, some parts or components will cross borders multiple times, as value is added in various stages of production. So with tariff threats looming,

the vibe in Detroit is less certain than ever.

As Chris Otts of the Wall Street Journal puts it,

we have less of a U.S. auto industry and more of a North American auto industry,

where tariffs aimed at U.S. neighbors

will be particularly destructive.

We spoke earlier this week.

How have tariff threats from the president or tariffs that have already been imposed? How has that impacted the thinking among industry players in the EV market?

Well, it's not just the C uh, the Cato audience that will think that, you know,

tariffs are, are bad policy.

I mean, if you gave a truth serum to pretty much everyone in the automotive industry,

uh, they would say the same thing.

Uh, it's very difficult to get, uh, the Ford and GMs and Stalantuses,

Toyotas of the world to say that outright because no one wants to get on the wrong side of the new administration.

But the reality is, Caleb, that over, you know, 30 years, the effect of NAFTA has been that there really isn't a United States auto industry. There's a North American auto industry. Many cars are assembled in Canada and Mexico. And even if you just take those out, which of course, you know, we're talking about very popular cars, you know, Honda CRV, Civic, Chevy Blazer, lots of full-size pickup trucks, assembled internationally and imported. But even if you took those out of the equation,

there's really no such thing as a fully U.S. built car. They all have components, parts that are

sourced with multiple steps. Some of these parts are crossing the border multiple times,

values being added back and forth, back and forth. So when Trump came out and talked about a

25% tariff on Mexico and Canada, I mean, there was there was both a sort of scrambling that we

saw in the industry, a sort of, I don't want to say panic, but it's a very big effect that many suppliers and automakers and their suppliers weren't sure what they were going to do. And then also,

it would have such a big impact and it's so hard to mitigate in the short run that there was also

sort of a resignation about it that that we sensed in reporting on it just because there

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