Gears grinding: What tariffs mean for automakers and the metal behind them

President Trump says he might offer temporary relief on the 25% tariffs hitting imported autos and parts, but there’s still no official carveout, and the market is already feeling the squeeze.

“They need a little bit of time,” Trump said this week, referring to carmakers shifting their sourcing back to the U.S. “Because they’re going to make them here.”

That’s a change in tone from the no-exemption rollout just weeks ago, when tariffs were slapped on all imported sedans, SUVs, vans, and light trucks starting April 3. The next wave, a full 25% duty on parts like transmissions, engines, and EV batteries, is still scheduled to hit May 3.

The United States-Mexico-Canada Agreement (USMCA) compliant vehicles might dodge the worst of it, but that’s not much comfort. Most cars made today include parts that cross the U.S.-Mexico border several times. It’s said that by the time a final car hits the market, it’s effectively crossed the border more than 40 times. Automakers don’t shift those supply chains overnight.

Mexico’s already getting hit. Ciudad Juárez lost 2,500 factory jobs last month, mostly from U.S.-owned operations. Stellantis idled its Jeep plant in Toluca for all of April. VW laid off 150 workers in Puebla. Ford, GM, and Toyota haven’t pulled back yet, but ripple effects are showing up, even in local businesses. Restaurants near the plants are ordering less meat and tortillas. When factory workers stop spending, it trickles down fast.

“Mexico is in a crunch,” said Rice University’s Tony Payan, found here in the Detroit News. “I think it might already be in a recession.”

President Claudia Sheinbaum is trying to keep things stable. She hasn’t retaliated, and she’s stuck to diplomatic language like “respect” and “collaboration.” So far, it’s helped her keep an 80% approval rating. But if the layoffs and economic strain keep growing, her strategy will face real pressure.

Some trade experts say there’s talk of a deal, possibly reducing the 25% tariff to 12.5% on non-compliant goods if Mexico agrees to curb Chinese investment. But that’s all just speculation for now.

What does this mean for aluminum? Pretty much everything.

The auto industry is aluminum’s biggest downstream customer in North America. From castings to rolled sheet, billet, extrusions, it’s all in the mix. If automakers delay production, pause programs, or start switching up materials to dodge tariffs, it hits the entire supply chain.

Scrap exporters are already feeling it. Demand for auto-linked grades like twitch and zorba is soft. Recyclers and remelters are watching policy updates like their weather reports. Mills, foundries, die casters, all of them are stuck in limbo, waiting to see what comes next.

The pricing outlook’s not helping. Goldman Sachs just cut its Q3 aluminum forecast to $2,000/mt, citing slowing demand and growing uncertainty. Add in the newly instated tariffs of up to 245% on Chinese aluminum products, rising freight costs, and slumping construction demand, and you’ve got a market that’s walking on eggshells.

Trump’s not exactly clearing things up. “I don’t change my mind, but I’m flexible,” he said this week. “Sometimes you have to go around it, under it or above it.”

Translation? Nobody knows what’s coming next. Not carmakers, not recyclers, not aluminum suppliers. If exemptions show up, it’ll buy some time. But if this drags into summer, expect real pain on both sides of the border, not just in Mexico.