What Donald Trump’s proposed tariffs could mean for F1: Cadillac, Ford, Haas

After sworn into office for his second term as President of the United States in late January, Donald Trump has suggested strong terms for potential tariffs that would add extra fees on goods entering the United States from Canada, Mexico, and China. With the threat of tariffs in the air, many countries have suggested counter-measures that would effectively serve as a tariff against the import of US goods.

While these fees are not yet in effect, PlanetF1.com investigated how the proposed tariffs could impact the motorsport world as a whole, and the F1 world in particular — especially as American entities like Haas, Cadillac, and Ford either enter or continue participating in the pinnacle of open-wheel racing.

What to expect from Trump’s tariffs

Should Trump’s tariffs actually be enacted, the automotive industry will absolutely feel the strain — and that strain will seep out into the world of motorsport.

Before we dig in, it’s important to establish a little context about the terms of these tariffs, as well as the industries that will fall into their remit.

Trump has declared an economic emergency in order to place a 10% tariff on all imports from China, and 25% on imports from Mexico and Canada. According to the United States Census Bureau, Mexico, Canada, and China are America’s three largest trade partners, with 40.5% of all US imports and exports being conducted with these countries.

With the implementation of the North American Free Trade Agreement in 1994, tariffs on trade between these three countries were lifted on countless prominent goods. That has allowed all three countries to benefit economically from the ability to move goods across the North American continent, and it has effectively tied together the US, Mexico, and Canada in terms of economic prosperity. Adding tariffs to all trade between these three countries will result in an immediate uptick in price for American consumers.

While Trump’s tariffs have not been universally accepted or implemented, his proposed duties would impact the following areas:

• Automotive
• Alcohol
• Housing
• Fuel
• Groceries, including avocados and maple syrup

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Trump’s tariffs will absolutely impact the automotive world…

One of the industries that would be hit hardest by Trump’s tariffs is the automotive industry.

Due to the freedom of trade offered by NAFTA, an individual car part can cross a border as many as six times before a vehicle is finally assembled. On top of that, many vehicles sold in America are assembled in Mexico. The additional costs added by the tariffs are expected to be passed onto the consumer.

Andrew Foran, an economist at TD Economics, estimated that a new car price will jump by about $3,000. Other estimates from the Detroit Free Press?range closer to a $9,000 price hike.

This is because automakers may feel like their options are “limited,” according to David Adams, CEO of Global Automakers of Canada.

Adams told Automotive News, “It’s not something I think that manufacturers will do lightly, but they may be in a situation where the options are relatively limited.”

Critically, Adams is not talking about raising prices: He’s talking about Canadian and Mexican automotive parts manufacturers shutting down.

“[Trump’s] going to have a hard time listening to senators in his own party, influential congressional reps, governors, union leaders, people, Americans, who will feel the full brunt of what he tried to do to us.”

Linamar Corporarion CEO Linda Hasenfratz and Automotive Parts Manufacturers’ Association CEO Flavio Volpe both state that tariffs will result in an immediate impact in the automotive world. Around 100,000 automotive-related jobs in Canada, for example, are expected to disappear. An additional one million automotive-related jobs could also disappear in the United States and Mexico.

And automotive-specific parts are not the only thing threatened. Canada is the largest exporter of petroleum to the United States, supplying around 60% of America’s crude oil. Oil is critical not only to supply gasoline, but it’s an essential component of the plastics and lubricants used to construct various other elements of a car.

Further, while there is currently no talk of the US implementing tariffs on trade between other regions like Europe or the United Kingdom, an overall increase in consumer goods in the US will be passed on to other trade agreements.

… As well as the racing world

Race cars are complex machines, with F1 cars in particular consisting of over 14,500 individual parts. Some of those parts must be made by the Formula 1 team in question, while others are “off-the-shelf” components whose use is mandated by Formula 1. It is impossible to know how many of those components are purchased from the United States, and how many are manufactured in a country like Mexico or Canada.

But even if an F1 car component isn’t directly involved in a Trump-instituted tariff, the global consequences of such a widespread increase in price are expected to be wide ranging.

Further, a growing American influence in Formula 1 means there’s likely to be a localized impact.

Haas F1’s headquarters, for example, is in Kannapolis, North Carolina; there, the team completes its CNC machining or other fabrication before those parts are shipped off to be assembled, along with a slew of Italian-made components, in Banbury, UK. It’s likely that the resources to make the Kannapolis parts, if not the parts themselves, are sourced from a country like Canada or Mexico.

Or consider Cadillac. The incoming Formula 1 team has bases in Indiana, North Carolina, and Michigan, where it likely expects to operate within its existing automotive trade network to source and manufacture parts. Those parts will very likely have passed over borders several times before making it onto the F1 car or power unit.

Because Formula 1 is a big-budget sport to begin with, the involved manufacturers will likely be able to absorb any inflated costs — but it does raise concerns about how teams will be able to exist within the series’ cost cap.

American-based race series like NASCAR or IndyCar will be more likely to absorb rising costs as a result of tariffs than an international series like Formula 1.

There could be issues even without tariffs

In the wake of backlash from US trading partners and US industries, President Trump has already suggested that he could walk back the terms of his tariffs — but American automakers and race teams could still feel the impact.

Countries like Canada have already discussed issuing retaliatory tariffs, and economists have theorized that America’s perceived instability could encourage Canada and Mexico to forge trade relationships with other countries in order to decrease reliance on the United States.

Again, there is currently no guarantee that these tariffs will be implemented, or that their terms will remain static. Both Mexico and Canada have already negotiated a pause on American-implemented tariffs in order to negotiate a better result for everyone involved.

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