With all of the talk of tariffs that have been going around for the last few months, most of the focus has been on the numbers and percentages involved, along with how that will impact the prices of cars and parts here in the US. That’s a perfectly reasonable thing to focus on since it’s what will directly impact your budget and the cost of your next vehicle or getting repairs on your current ride. What often gets overlooked, or at least overshadowed, is how this entire situation has even become an issue and what it means in the grand scheme of things. In particular, we need to talk about what it means for a car to be “made in America” and what might happen for those words to mean anything real in the future.
What Does “American-Made” Even Mean?
To me, this is the fundamental question that all of this tariff business really raises, particularly for the auto industry. It’s easy enough for any of us to say that we “Try to buy American” or focus on “American-made products,” but at this point, what does that even mean? Think about something simple like a t-shirt with a label that says “Made in America.” What was made here? Does that mean the cotton was grown in the US, then Americans processed that into fabric, and then Americans sewed that fabric into the shirt? What about the thread that was used—was it entirely made here in the US, too? How about the dyes used on the fabric? See how complicated things become even with something simple?
Cars, trucks, and SUVs are made from thousands of different parts and components; would you consider American-made vehicles to be those that are built only from parts made here in the US? What about the materials and components that go into those parts? It’s an incredibly complex thing to try to unravel and a massive headache. The simplest way to go is to focus on vehicles that have their final construction done here in the US. Sure, that means you’re looking at parts coming in from other countries, and some manufacturing can be done elsewhere with final assembly in the US, but at least it’s something.
Which Vehicles Are Still Made in America?
If we go with this idea of what it means for vehicles to be American-made these days, then certain brands and models emerge as the leaders in this regard. At the top, at least right now, is Tesla because all of their vehicles sold here in the US are assembled here in the US, based on information compiled by Cars.com for their annual American-Made Index report. Tesla’s Model 3, Model S, and Model X are all made in California, while the Model Y is assembled both in California and in Texas. It may surprise you that one of the next leaders is actually Honda—that shouldn’t surprise you, however, because Honda was the first Japanese car company to start manufacturing vehicles here in the US. Honda opened its plant in Marysville, Ohio, to build the Accord in the early 1980s, and it has remained a leader in this regard ever since.
The Honda Ridgeline, Odyssey, Passport, and Pilot are all built here in the US along with the Accord; Honda’s luxury brand, Acura, also builds numerous models like the Integra and MDX in Ohio. Jeep also has a plant in Ohio where the Gladiator and Wrangler are assembled, although the Compass was built in Mexico. Kia makes the EV6 and Sportage in Georgia, while the Nissan Pathfinder and Volkswagen ID.4 are assembled in Tennessee. What about American car companies? Chevy makes the Colorado in Missouri, but the Blazer, Equinox, Silverado 1500, and Traverse are all built in Mexico (or a combination of Mexico and US factories). Similarly, Ford builds models like the F-150 and Explorer here in the US, but the Maverick and Bronco Sport come up from Mexico. Speaking of which…
How Does Canada and Mexico Factor Into Things?
If you start digging into lists showing where vehicles are made, you’ll see the US, Mexico, and Canada become recurring entries—other than obvious exceptions like BMW models built in Germany or Land Rovers assembled in the UK. The reason for this is that President Trump, during his first term, negotiated the United States-Mexico-Canada Agreement (USMCA) as a replacement for the North American Free Trade Agreement (NAFTA) from the 1990s, which he often criticized. The USMCA is a similar trade agreement that revised or changed many of the terms and rules that had been established under NAFTA.
A big part of that is the Rules of Origin used to determine the national origin of a product to fall under this agreement, thereby avoiding tariffs and taxes. The idea is to encourage products to be built here in North America rather than elsewhere, and the USMCA requires that 75% of passenger vehicles, light trucks, and auto parts have to include content from North America to fall under these rules and avoid tariffs (older tariffs, not the new ones). Similarly, the USMCA requires that 40%-45% of a vehicle’s production must be performed by workers earning at least $16 per hour, and 70% of a vehicle’s steel and aluminum must originate in North America.
You might’ve noticed a key term I’m using: North America. Not the US, which means that Mexico and Canada are included in these requirements—it’s a trade agreement between the US and those two other countries, after all. So manufacturers can operate plants in Mexico or Canada and abide by these rules, thereby avoiding tariffs and taxes that have to be paid by someone like Kia importing a vehicle from South Korea. Of course, new tariffs in recent months have ignored this whole thing and include big taxes on vehicles coming into the US from Mexico and Canada, which is a big part of why car companies and the governments of those countries have been so upset.
How Should Cars Be Made in America?
So, what should be the ultimate goal when it comes to American-made vehicles? Ideally, not only final assembly but the manufacturing and construction of many other parts and components should also occur in the US to rejuvenate our manufacturing base. It’s no secret that companies (not just car companies but just about every industry) have shipped manufacturing overseas or down to Mexico whenever possible to make things cheaper. The idea of using tariffs to encourage companies to bring manufacturing jobs back to the US isn’t inherently a bad one, but whether or not it’s actually capable of doing that is hotly debated by financial experts and economists—I’m neither of those things.
The ultimate problem is a matter of scale. These jobs left the US over the course of decades and can’t just come back in a few months, or even a couple years. Assembly plants, assuming companies want to even build them here, take years to get going and staff with teams ready to build. Immediate tariffs imposed with the idea that companies will start building parts and whole cars here in just six months, or else everyone suffers, are flawed at best. These things take time, no matter what anyone wants to say about it, and not factoring that in is a mistake.
Furthermore, what happens when products are made here in the US but also cost 50% more because they now cost more for companies to make, and those companies aren’t about to make less profit on them? In other words, it’s a huge issue, but I’d say the first step is greater transparency so we know where vehicles are made and where their parts and materials come from. But not just vehicles—we should know where all of our products are coming from so we have a better sense of how to support businesses that want their employees to succeed, as opposed to those that seek profits at any cost.
