By Jarrett Renshaw
(Reuters) -President Donald Trump frequently describes a booming U.S. auto industry, fueled by new factories from Canada, Mexico and Europe that he says will soon be producing American-made vehicles for global markets – from Tokyo to Paris.
“We have so many car company factories under construction or being designed right now. And they’re coming from China. They’re coming from Mexico,” Trump said at a White House event earlier this month. A few days later, he lamented the loss of U.S. car production over the years, and proclaimed: “Car factories are coming back.”
But there is little evidence of a construction binge of new U.S. car factories. Instead, auto companies are making tactical moves at existing plants as they adapt to the two pillars of Trump’s second-term business agenda: tariffs, and policies hostile toward electric vehicles.
To sidestep tariffs, some automakers are retooling existing, idle factory space in the U.S. to build vehicles that they have been importing, and which now face levies.
For example, Nissan has said it plans to make more Rogue SUVs and other vehicles at its plants in Tennessee and Mississippi, while reducing imports from Japan. Japanese vehicles face levies of 15% under a tentative deal with the Trump administration.
“We’re seeing underutilized plants being filled with products that were previously imported. There is no boom in new builds,” said Sam Fiorani, vice president at research firm AutoForecast Solutions.
PIVOT BACK TO GAS CARS SPURS INVESTMENT
Meanwhile, many car companies are pulling back from EV commitments they made earlier in the decade, and leaning in to production of gasoline-powered vehicles. Much of the capital investment touted by companies in recent months amounts to an unwinding of EV projects that they had trumpeted during the administration of former President Joe Biden.
For example, General Motors in June said it would retool a factory in suburban Detroit to build gas-powered pickup trucks and the Cadillac Escalade SUV. The move partially reverses a multibillion-dollar plan announced in 2022 to make the factory GM’s hub of EV-truck production.
The industry’s huge collective bet on EVs that began late this past decade drove a sharp increase in factory spending during the Biden administration, figures compiled by consultancy AlixPartners show. The company tracked capital investments in the U.S. by the traditional Detroit car companies – GM, Ford, and Chrysler-parent Stellantis – as well as EV-only players Tesla, Rivian and Lucid.
On average, those companies spent about $21 billion annually from 2017 through 2020 – the same period as Trump’s first term. During the next four years, with Biden in office, their spending averaged about $38 billion per year, most of it related to EV and battery production, AlixPartners said.
Automakers already had been walking back EV plans even before Trump won the 2024 election, citing weaker-than-expected demand. Car executives expect the Trump administration’s policies to further cool interest in battery-powered cars.
ADMINISTRATION SEES BOOM IN VEHICLE OUTPUT, EXPORTS
Trump has made the economy the cornerstone of his political brand, including tariffs, deregulation and promises of industrial revitalization. A White House spokesman said his trade and energy policies have already fueled historic investments in U.S. automaking and shaved off billions in regulatory costs.
“As these policies and President Trump’s unprecedented trade deals with the EU, Japan, and others take effect, cars will soon roll off Detroit assembly lines to showrooms in Tokyo, Frankfurt and Paris,” spokesman Kush Desai said.
The White House notes that imports of automotive vehicles, engines and parts have fallen by about 10% from the first quarter of this year, to $421.4 billion.
So far, U.S. vehicle production has ticked higher by about 4% this year, but recent figures are tracking below the average of the past decade, Federal Reserve data shows.
David Adams, president of Global Automakers of Canada, disputed Trump’s claims that automakers are leaving Canada for U.S. plants, and said jobs are holding steady.
“The notion that everybody is vacating Canada to produce in the U.S. doesn’t jibe with reality on the ground,” he said.
Adams said Trump’s aggressive tariffs could eventually reshape North American auto production, but added, “We’re not there yet.”
(Reporting by Jarrett Renshaw in Philadelphia; Editing by Mike Colias and Matthew Lewis)
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