The U.S. automotive industry is facing heightened uncertainty following Donald Trump’s election, with proposed cuts to electric vehicle (EV) subsidies and tariff increases posing significant challenges.

According to Yahoo Finance, while the auto industry experienced a brief boom during the COVID-19 pandemic, it has been struggling lately. Manufacturers such as General Motors (GM) and Ford have scaled back their EV investment plans in response to sluggish market conditions. Trump has previously expressed skepticism about the viability of EVs, citing their high costs and limited range, and emphasizing the need for alternative solutions.

Reuters recently reported on internal documents from Trump’s transition team suggesting plans to significantly reduce EV subsidies and impose tariffs on battery materials. The team has reportedly called for the repeal of the Inflation Reduction Act (IRA) provision offering up to $7,500 in tax credits for EV purchases.

Trump’s proposed tariff policies also raise concerns. He has advocated for a 60% tariff on Chinese imports and a general 10–20% tariff on all foreign goods, with additional levies on Mexico and Canada. Such measures could heavily impact U.S. automakers with production facilities abroad. Analysts estimate that a 25% tariff on imports from Mexico and Canada could increase the average price of imported cars in the U.S. by $3,000 and significantly reduce industry profitability.

While some experts believe Trump’s policies could hinder the transition to EVs and weaken the U.S. industry’s global competitiveness, others see potential benefits. Ford’s Executive Chair Bill Ford noted that Trump expressed a willingness to support the industry and demonstrated greater knowledge of its challenges compared to his first term.

Meanwhile, Trump’s potential implementation of a carbon tax could further complicate matters, particularly for export-driven industries like South Korea’s automotive sector. Although Trump has opposed environmental policies such as the Paris Climate Agreement, experts suggest he might leverage a carbon tax as a trade barrier.

The industry remains on edge, with Trump’s policies likely to shape the future of the U.S. auto market.