After backing down on Mexico and Canada, a major tariff escalation presumably starts Monday.
Ford Warns TrumpThe CarDealershipGuy reports Ford CEO warns automakers could lose “billions” if Trump tariffs take effect:

Ford is bracing for a challenging 2025, cutting its earnings forecast to as much as $8.5 billion, down from $10.2 billion last year, as vehicle prices soften and the company absorbs the cost of launching new SUVs.

Beyond its financial pressures, Ford is now caught in a policy storm. The Trump administration is considering 25% tariffs on imports from Mexico and Canada, two key regions for Ford’s supply chain. CEO Jim Farley warns that the impact would be severe.

What Farley is saying:

• A 25% levy on goods from those countries would cost the company ‘billions and billions’ in profit and lead to industrywide layoffs, he told Bloomberg TV.

• He argues that U.S. automakers would be hit harder than foreign competitors importing from Asia and Europe, who wouldn’t face the same penalties.

• “There are millions of vehicles coming into our country” that aren’t subject to the proposed tariffs, he said on a recent earnings call. “We can’t just cherry-pick one place or the other, because this is a bonanza for our import competitors.”

Trump backed down from Mexico and Canada tariffs after getting minor concessions on border security that may not even be delivered. But Trump has renewed his threats to reinstate them.
Auto Industry on High AlertAlso from the CarDealershipGuy, please consider Trump’s new tariffs put the auto industry on high alert:

President Donald Trump’s plans to impose stiff tariffs on Canada, Mexico, and China has left the auto industry in the middle of a trade dispute. And many of those likely to be affected by the measures, are weighing in.

[Update 4:57 a.m. EST February 4] First things first: The sweeping tariffs, which started on Tuesday, February 4, will require China to pay a 10% duty on their goods and services.

[Update: 4:52 a.m. EST February 4] China wasted no time hitting back after new U.S. tariffs took effect Tuesday. Starting February 10, China will put an extra 15% tariff on U.S. coal and liquefied natural gas imports. American crude oil, agricultural machinery, and certain cars will see a 10% tariff hike.

[Update 4:47 a.m. EST February 4] Late on Monday, February 4, Canadian Prime Minister Justin Trudeau and President Trump reached an agreement to pause the 25% tariff on Canadian imports to the U.S. for 30 days. As part of the negotiations, Canada will send 10,000 frontline workers to the border and appoint a “fentanyl czar” to help stop the flow of the illegal drug.

[Update 11:37 a.m. EST February 3]: Mexican President Claudia Sheinbaum announced this morning that the U.S. agreed to delay tariffs for one month after she committed to deploying 10,000 troops to the border.

• Canada is set to take a bigger hit from the tariffs, with about 75% of its exports heading to the U.S., compared to just 13% of American exports going north.

• In terms of motor vehicles and parts only, roughly 90% of exports from both Canada and Mexico are imported to the U.S., according to the Mexican Automotive Manufacturers’ Association and the Canadian Vehicle Manufacturers’ Association.

• In 2023, Mexico exported $153 billion in motor vehicles and car parts to the U.S. while Canada exported $58 billion, per Census Bureau data.

The levies have drawn a barrage of public criticism from those with deep ties to the industry.

• Matt Blunt, President of the American Automotive Policy Council, which represents Ford, GM, and Stellantis, said the tariffs undermine the billions invested in domestic and regional content requirements, raising the cost of building vehicles in the U.S. 

• The IAM Union, which represents 600,000 Canadian workers in the manufacturing sector (including automotive), stated the tariffs will lead to job losses, increased prices, and other negative impacts.

• China said it will file a lawsuit with the World Trade Organization regarding the tariffs and will “take necessary countermeasures.” 

On March 2, 2018, I posted Trump Tweets “Trade Wars are Good and Easy to Win.”If trade wars are good and easy to win, why didn’t Trump win them then? And please note that Biden kept intact all of Trump’s tariffs, and even added some.
The Tariff Lobby Given that Trump himself is “The Tariff Lobby,” his Truth Social post is a bit ironic. As for “worth the price that must be paid”, then why the hell did Trump back down?
“Trump Blinks on North American Tariffs”On February 3, I asked “Trump Blinks on North American Tariffs” Agree or Disagree?

Trump’s Bravado Lasts One Day

Yesterday, Trump defended his tariffs, saying in an all-caps post: “Will there be some pain? Yes, maybe (and maybe not!)” He added that “it will all be worth the price that must be paid,” and repeated a call to turn Canada into America’s 51st state.

Well that was a fast turnaround wasn’t it?

All Trump proved is that he is willing to break any deal he makes only to back down if the market objects.

On January 31, 2025, I commented Seven Charts Show Tariffs Would Harm the US Auto Industry:

The CATO institute does a great job explaining why tariffs on Canada and Mexico would be a very bad idea.

Trump Announces Reciprocal Tariffs Next Week Balance of trade data from census department through 2024, chart by MishYesterday, I commented Trump Announces Reciprocal Tariffs Next Week, a Major Trade War Escalation:

Trump announced no details, but I believe I have a good idea of what he means. Many charts tell the story.

Trump told Republican lawmakers of his plans during budget discussions at the White House on Thursday, three sources familiar with the plan told Reuters. Trump and top aides have said they plan to use higher tariffs on foreign imports to help pay for extending Trump’s 2017 tax cuts, which independent budget analysts say could add trillions of dollars to the U.S. debt.

I discussed the China, Vietnam, Mexico connection.
Imports from China UnderstatedTo understand how tariff avoidance works, please see The US Trade Deficit with China is Understated by as Much as 30 Percent:

Normal trade math does not add up. US imports and China exports are not in sync.

I asked Brad Setser, senior fellow for international economics at the Council on Foreign Relations, and Director of International Economics, for the United States Department of the Treasury to comment.Setser replied “Chinese exports started exceeding US imports only in those categories with tariffs, and only after the tariffs were imposed.”To stop that circumvention, Trump now threatens the world. My lead image shows what the result will be.More By This Author:Consumer Credit Jumps the Most Since Free Money Covid Stimulus ChecksTrump Announces Reciprocal Tariffs Next Week, A Major Trade War Escalation Nonfarm Jobs Rise By 143,000 In January, But The Big Story Is Revisions