Forget the EV tax credit. Rivian founder and CEO R.J. Scaringe is far more concerned about another threat from President Donald Trump: tariffs.
“It has, in some ways, bigger implications, far bigger, than what happens with the IRA tax credits,” Scaringe told reporters last week, referring to the 2022 Inflation Reduction Act, which contains pro-EV policies that Trump has attacked time and time again.
“There’s not a car company in the world that’s not thinking about moving supply chains around right now,” Scaringe said.
Trump plans to slap 25% tariffs on imports from Mexico and Canada on February 1, in an attempt to pressure those governments into preventing the flow of drugs and undocumented immigrants into the U.S. But it’s American consumers and companies operating here that will pay the price as higher duties jack up prices for finished goods and their component parts.
“The inflation environment that that’s going to create is, just from an economic standpoint, we believe could be really damaging,” Scaringe said of the blanket tariffs Trump has proposed.
The outlook is particularly nightmarish for America’s auto industry, which has for decades relied heavily on Mexico and Canada to build car parts and entire vehicles. Under the U.S.-Mexico-Canada agreement (and the North American Free Trade Agreement before that), there are no tariffs on most goods passing between the three countries.
Photo by: Rivian
“It’s not as if it’s like one supplier,” Scaringe said. “Many, many, many hundreds of billions of dollars have been invested in Mexico in production capacity for supply chains that supply to all of us. That will need to get remapped or will just carry higher costs.”
Scaringe said Rivian is fortunate in that much of the content in its vehicles is built in the U.S. The factory where the California-based startup makes its three EVs—the R1S SUV, R1T pickup and EDV commercial van—is in Illinois. A second plant is planned in Georgia. Still, he said the ripple effects of higher costs will be felt throughout the automotive supply chain.
Rivian is far from alone. This should put the scale of the issue into context: The research firm S&P Global Mobility estimates that 3.6 million light-duty vehicles sold in the U.S. in 2024 were built in either Canada or Mexico. That’s about 22% of all the new cars sold in America last year.
In a recent report, the firm said “virtually all” automakers and suppliers would feel the heat of Trump’s proposed tariffs. According to S&P Global, 23% of Jeep-parent Stellantis’ U.S. sales were sourced from Mexico. For General Motors, it was 22%. Nissan gets 27% of its U.S. sales from Mexico, and Volkswagen is “most exposed to tariff risk,” the report said, with more than 43% of its U.S. sales sourced from the country.
A Nissan spokesperson said the company “cannot speculate on potential policy changes or their impact.” Stellantis declined to comment. Several other automakers didn’t return a request for comment.
Photo by: InsideEVs
On top of that, it’s extremely common for cars assembled in the U.S. to get components—like wiring harnesses or entire engines—from those countries. Some parts cross the northern or southern border several times before making their way into a vehicle.
Electric cars are already, by and large, more expensive than their gas counterparts. (Rivians, for example, start at $70,000.) And the tariffs won’t help matters. The Chevrolet Equinox EV and Blazer EV are both made in Mexico, along with the Ford Mustang Mach-E. All Teslas get at least 20% of their content from Mexico, according to government filings.
But there’s a reason some U.S.-made EVs may be slightly more insulated from the tariffs than combustion vehicles, said Mike Wall, executive director of automotive analysis at S&P Global. To save on logistics costs, automakers often make their battery packs—the most expensive single part of an EV—near where the vehicle undergoes final assembly. Contrast that with combustion vehicles, which he said often get big, expensive parts like engines from outside the U.S.
Photo by: Rivian
“Now, those downstream components into that battery pack could be coming from a number of places, including Canada and Mexico, but that finished assembly is going to be, more likely than not, reasonably close by,” Wall said.
The big question going forward, Wall says, is what exactly these tariffs look like when all is said and done. The final measures could target specific goods, and that would alter their impact on the auto industry, he said.
Scaringe said Rivian is keeping a close eye on the tariff situation.
“I think today it’s hard to predict exactly how that’s going to go,” he said.
Got a tip about the EV world? Contact the author: Tim.Levin@InsideEVs.com
