By Brena Noble, bnoble@detroitnews.com
The era of the automotive industry as a global business is over, Ford Motor Co. CEO Jim Farley said from the floor of the Detroit Auto Show in the wake of diverging carbon emissions regulations, new import tariffs and differing consumer preferences.
The localization of manufacturing and supply chains is accelerating. The goal is to increase domestic jobs, to protect access to transportation for national security and enhance quality and sourcing reliability — but it can come with a cost of higher prices from import taxes, higher labor costs, less scale and capital expenditures. And it might threaten advances in future technology, risking having U.S. automakers fall further behind the Chinese.
“Our industry is starting to regionalize,” Farley told reporters on Tuesday. “It used to be a global business. Those days are over.”
If it proves out, it would be a reversal of 30 years of increasing globalization in the industry, as automakers previously sought industrial scale, geographic reach and lower labor costs to cut expenses, boost profits and increase market share. It, however, is also not a completely new concept. General Motors Co. pulled out of Europe, selling its money-losing Opel and Vauxhall brands in 2017, though it’s seeking to make a smaller-scale comeback there. But electrification, climate crises and international tensions have supercharged the trend.
Several automakers have announced investments in the United States. GM in June shared plans to reshore $4 billion in production from Mexico, in part to meet demand for profitable trucks and SUVs but also to reduce tariff costs. Chrysler and Jeep parent Stellantis NV has also said it’ll move some production here that had been slated for Canada and Mexico as part of a $13 billion investment.
Ford produces more vehicles in the United States, employs more hourly employees and exports more vehicles than any other automaker, but there’s more that still can be done, Farley said about the message he gave to President Donald Trump during a visit on Tuesday to Dearborn Truck Plant that builds F-150 pickups: “At Ford, America’s car company, we have more shifts that we can put on in our plants here in the U.S., and we have more to do.”
A “critical” need, he said, is renegotiating the United States-Mexico-Canada trade agreement after Trump instituted new tariffs on the neighboring nations last year. The president said on Tuesday that he’s in no rush to rehash the deal.
Although Trump said the USMCA “expires very shortly,” the law says otherwise. The trilateral trade agreement doesn’t end if the parties fail to reach an extension in 2026 during a mandatory review. The deal, as currently written, stays in place until 2036. For it to end sooner, one of the countries would need to actively leave the accord.
“We need to make revisions to USMCA,” Farley said. “We really see Canada and Mexico and the U.S. as an integrated manufacturing system.”
Mark Reuss, GM’s president, conveyed a similar sentiment during the Detroit Free Press Breakfast Club earlier in the day, but he emphasized the continuing worldwide interconnectedness of the industry.
“We make a lot of engines in Flint that go into trucks that are made in Mexico,” Reuss said. “That’s just one example of that. The supply chains are very complex. They’re global. You have to get into that detail to know that. And bringing production back to the United States is something that everybody would love to see because it’s jobs, and it’s growth; it’s all of that. So we’re doing that.”
Likewise, GM CEO Mary Barra this week before the Automotive Press Association emphasized that a renegotiated USMCA needs to work in order for domestic automakers to compete on a global stage: “We’re providing input on what we need to have a strong U.S. automobile business and leadership in this country that allows us to have leadership in other countries.”
Regions across the globe, however, are becoming increasingly isolated. Chinese automakers dominate their country, the largest auto market in the world, with inexpensive electrified vehicles, and they’re making inroads in the South Pacific, South America and Europe. For now, tariffs have been an obstacle to their entry in the United States, challenging the Detroit Three to develop products to compete against them globally, but not in their largest, most profitable home market.
“What we’re worried about is how competitive will we be on a global stage as the market continues to advance around Chinese OEMs, to an extent, the European OEMs, the Japanese and Koreans?” said Michael Robinet, vice president of forecast strategy at S&P Global Mobility, during an auto show panel. “As they continue to advance, what is going to happen to the competitiveness of U.S. manufacturers? We look at a short-term to mid-term opportunity, followed by — I’m not going to call it nuclear winter, but it is very much a concern of ours.”
Many Americans continue to balk at all-electric vehicles, and the Trump administration has defanged greenhouse gas emissions regulations and proposed significant rollbacks in fuel economy standards. More V8-powered trucks and sports cars are hitting the market, and automakers have scrapped EVs and taken billions of dollars in write-downs for them. Although Europe has pulled back on its 2035 ban on the sales of new vehicles with internal combustion engines, regulations remain more aggressive and EV adoption is higher.
In lieu of global production scale within a single company because of the challenges from the continental differences, Farley said he expects there’ll be more partnerships to create economically efficient volumes over consolidation. He pointed to the Dearborn automaker’s agreement announced last month with French rival Renault SA on EV and commercial vehicles for Europe. The Blue Oval is partnered with Volkswagen AG in the commercial sector there, too.
There are benefits to localization, like lower shipping costs and a faster response to quality issues. Several years of supply chain disruptions from the COVID-19 pandemic, trade retaliation and act-of-God events also show advantages, said Kristin Dziczek, a policy adviser for the Federal Reserve Bank of Chicago.
“You can manage it better, sure, but also you may need to have some things that you do regionally and globally,” she said. “When there’s a fire at a supplier or a natural disaster in some region of the country, even if it’s regional or local, it can still be disrupted, so they’ve got to balance that.”
U.S.-built vehicles increased to 57% of U.S. sales last year from 51%, she estimated. Suppliers in the next year expect to invest more in domestic manufacturing and job creation and see reshoring as their greatest opportunity, according to surveys conducted by MEMA, the vehicle supplier association.
“We support the administration’s desire to bolster manufacturing in the U.S. and in North America as a whole,” Mike Jackson, executive director of strategy and research, said, noting that members support USMCA. “At the same time, though, we also know that there are still many unknowns. And so with that, it’s very difficult. Our members have simply said, ‘Well, how can we invest?’ We don’t have the full picture.”
The Trump administration, in 2025, installed tariff offsets for U.S.-produced vehicles. That and loosened regulations ultimately are “net-net” profit positive for Ford, Farley said, but affordability is a growing concern this year. Average monthly payments for a new vehicle are more than $700, and a fifth of buyers are paying more than $1,000. Forecasters are predicting an almost 3% year-over-year sales decline.
Ford in December emphasized forthcoming affordable trucks, and its next-generation EV will first launch in 2027 as a Maverick-like midsize truck starting at $30,000. Although the automaker left the U.S. sedan market by 2020, it’s a “vibrant” segment, Farley said, but the challenge has been producing them profitably.
“We may find a way to do that, but you have to produce it here, compared to bringing them in from Europe like you did before, or Mexico,” Farley said. “Never say never.”
