Trump’s Booming U.S. Auto Factory Claims at Odds With Reality

• Automakers are retooling idle U.S. plants to replace imports under new Trump tariff policies.

• Investment in EVs has slowed, with automakers shifting focus to gasoline vehicle production.

• Canadian officials reject claims of factory relocations as jobs remain stable north of the border.

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U.S. President Donald Trump has pointed to what he describes as a wave of new car factories under construction, but available data and automaker strategies show a more cautious industry retooling existing facilities rather than building new ones.

In recent remarks, Trump claimed that new auto plants from Canada, Mexico, and China are being built across the United States. “Car factories are coming back,” he said at a campaign-style event earlier this month.

However, industry analysts say manufacturers are avoiding new construction and are instead repurposing existing plants to adapt to the Trump administration’s trade policies and tariffs, especially those targeting EVs and imports.

Automakers including Nissan have announced plans to expand production of models such as the Rogue SUV at their Tennessee and Mississippi facilities, while cutting back on vehicle imports from Japan. Under a tentative agreement with the U.S. administration, Japanese vehicle imports face a 15% tariff.

Major automakers are also retreating from some EV initiatives launched in the previous decade. Many are re-directing investment toward gasoline-powered vehicles, reversing or delaying EV plans. The Trump administration’s about-face on EV incentives is in part responsible for the reversal.

General Motors announced in June that it would retool a factory near Detroit, a move similar to those made by other carmakers. Figures from consultancy AlixPartners show automakers’ capital investment averaged $21 billion annually during Trump’s first term. That figure rose to $38 billion per year under President Joe Biden, largely due to EV and battery plant spending.

The shift away from EVs began before Trump’s 2024 election victory. Executives have cited softer-than-expected demand, which they anticipate will decline further under Trump-era policy changes. The Trump administration maintains that its trade and industrial policies are supporting the auto sector through reduced regulatory costs and new trade deals.

“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,” said White House spokesman Kush Desai.

Imports of vehicles, engines, and parts have declined by roughly 10% in the first quarter to $421.4 billion. Vehicle production in the U.S. is up about 4% so far this year, though Federal Reserve data shows output remains below the average from the past decade.

Trump’s statements have also drawn criticism from the Canadian auto industry. David Adams, president of Global Automakers of Canada, rejected suggestions that manufacturers are abandoning Canadian facilities in favour of U.S. production.

“The notion that everybody is vacating Canada to produce in the U.S. doesn’t jibe with reality on the ground,” Adams said. He acknowledged that tariffs could affect long-term production strategies but said no major shift has yet occurred.

Source: Reuters