1. Stay agile on tariffs: As trade policies evolve, staying informed on tariff structures and evaluating supply chain strategies will remain critical. 

2. Monitor EV tax policy: Changes to federal EV incentives remain a point of discussion, with potential implications for demand and investment planning. 

3. Track regulatory developments: Adjustments to emissions and safety standards continue to shape the industry’s long-term strategic outlook.

Automotive companies are no strangers to government intervention, but the breadth and complexity of policy changes in 2025 could play an even more significant role in their strategic decision-making. Even when our survey was deployed in December 2024, 80% of respondents identified tariffs as their top policy concern for 2025. This concern came to fruition when the administration considered a 25% tariff on certain imports from Canada and Mexico and implemented a 10% tariff increase on Chinese products, prompting industry-wide discussions on supply chain strategies and cost considerations. Companies are evaluating a range of approaches in response, including assessing sourcing alternatives and monitoring policy developments.

Beyond trade policy, 47% of respondents cited the potential elimination of Inflation Reduction Act incentives, including the $7,500 EV tax credit, as a key area of focus. These incentives are currently in place through 2032, but the new Congress could seek to end them soon as part of the budget reconciliation process. Stakeholders continue to assess how any adjustments may influence consumer preferences and investment decisions.

Regulatory developments also remain on the radar, with 35% of respondents highlighting anticipated changes to Clean Air Act provisions, CAFE standards, and GHG regulations. Shifts in emissions policies are a recurring topic of discussion as manufacturers align long-term investments with evolving regulatory priorities. Meanwhile, survey respondents also noted reshoring initiatives (25%), autonomous vehicle safety regulations (25%), and domestic energy production policies (23%) as areas with potential industry impact.

For 80% of respondents to our December survey, tariffs are a key policy concern in 2025. The potential imposition of new 25% tariffs on imports from Canada and Mexico signals a significant shift in U.S. trade policy, raising critical questions about executive authority, trade agreements, and long-term regulatory stability.

The Trump administration’s reliance on the International Emergency Economic Powers Act (IEEPA) to impose tariffs on economic and security grounds is unprecedented. While courts have historically granted broad presidential discretion in trade matters, legal challenges from trade groups or affected industries could shape how these potential tariffs are enforced.

The real impact, however, will be felt by potential changes to the U.S.-Mexico-Canada Agreement (USMCA), which is scheduled to be reviewed by all three countries in 2026. This review may come sooner than expected, potentially resolving the ongoing dispute over automotive trade rules. While the prospect of 25% tariffs on parts that cross the border multiple times poses challenges, it is also opening a new phase of adaptation within the North American supply chain.

Given this evolving tariff landscape, automotive companies are turning their sights to the potential impact of USMCA’s uncertain future. The long-term stability, once provided by the terms of the agreement, is now under question, but the situation remains fluid. It’s more important than ever for companies to engage in proactive regulatory dialogue and position themselves for ongoing changes, which may bring both challenges and opportunities in equal measure.