Trump’s First Day: New Insights for the Auto Industry
President Trump’s return to the White House, alongside his initial executive orders impacting the North American auto industry, largely align with previous expectations, according to S&P Global Mobility. This analysis examines key areas where the new administration’s policies will likely reshape the automotive landscape.
Key Issues Affecting the US Auto Industry:
- Perceived threats from mainland Chinese automakers and technology companies.
- Environmental policy, particularly fuel emissions, infrastructure spending, and safety regulations.
- Trade policy concerning the US-Mexico-Canada Agreement (USMCA) and potential national security tariffs.
“America First” Agenda’s Impact
Trump’s emphasis on “Make America Affordable and Energy Dominant Again” is one of the most impactful areas for the auto industry. This includes reversing restrictions on energy production – and promoting “consumer choice in vehicles,” signaling a potential easing of vehicle emission regulations.
One crucial policy move involves withdrawing the US from the Paris Climate Accord, which would end US participation in an agreement focused on reducing global climate change.
Streamlining Government
The “Drain the Swamp” category will likely see the new administration reform government bureaucracy and potentially pause regulations. Agencies like the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) could potentially expedite rule-making proposals.
Expected Changes to Federal Regulations
S&P Global Mobility anticipates that fuel economy standards might be frozen at 2027 levels, rather than being reduced for the 2028 model year. The EPA is also expected to adjust emission standards, aligning with NHTSA guidelines.
Federal regulations may not align with California’s more stringent requirements. Revocation of California’s EPA waiver is highly probable.
The Inflation Reduction Act & Bipartisan Infrastructure Law
The Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law are also likely to be affected. Under the IRA, EV tax credits for retail consumers could be eliminated.
Trade and Tariffs
Trade policy is central to Trump’s agenda, including tariffs. The new trade policy’s specific details remain unclear, but impacts will include increased costs of manufacturing within the US and affect global sourcing.
A 10% universal tariff and a 30% tariff on imports from mainland China would likely lead to a period of elevated inflation. S&P Global Mobility anticipates the Federal Reserve pausing its easing cycle.
Biden-Era Rules on Autonomous Vehicles
While the ban doesn’t take effect until 2027 for software and 2030 for hardware, it effectively bans China from manufacturing in Mexico. S&P Global Mobility is monitoring the new administration’s response.
Impact on the Auto Industry
S&P Global Mobility assesses these changes could result in the EV share of US light-vehicle sales reaching about 25% in 2030, down from a previous forecast of 30%. Automakers are expected to adapt and make decisions based on the new policy.
S&P Global Mobility provides in-depth analysis to help industry stakeholders navigate these evolving conditions.
