DETROIT – President Donald Trump suggested last week that automakers may receive a reprieve from the looming 25% auto tariffs, aiming to provide them additional time to relocate or enhance vehicle and parts production in the United States.
“They need a little bit of time because they’re going to make them here,” Trump stated on April 14. “But they need a little bit of time, so I’m talking about things like that.”
Although industry leaders and analysts acknowledge the value of additional time, extending the timeline to boost U.S. manufacturing poses significant complexities.
A critical factor is the impending 25% tariff on auto parts, which is set to take effect on May 3. This will increase vehicle costs regardless of whether they are assembled domestically or imported.
Moreover, moving an entire plant is rarely a straightforward task, despite calls from politicians for such actions. The process of relocating production lines requires years of thorough planning and substantial financial investment.
Establishing a new assembly facility necessitates coordinating with hiring efforts, developing infrastructure such as water and energy supplies, and constructing a comprehensive parts supply chain, among various other logistical considerations. These steps come after determining a site, purchasing land, and addressing potential zoning alterations.
Facilities like Hyundai Motor’s new 16-million-square-foot plant in Georgia typically require thousands of acres and extensive factory space.
“All of those things have to fall in place,” explained Doug Betts, president of J.D. Power’s automotive division and an industry veteran. “It’s a very, very complicated process.”
According to Collin Shaw, president of the MEMA Original Equipment Suppliers Association, obtaining necessary permits for a new facility can take between six to twelve months. Construction typically spans an additional twelve to eighteen months, or possibly longer, followed by a further year or more dedicated to tooling and ramping up production.
The large assembly plants that Trump envisions automakers building in the U.S. represent substantial investments that take years to complete. These facilities can employ thousands of workers and function more like self-contained manufacturing cities, complete with a body shop, paint plant, stamping, and other essential structures.
Even smaller supplier plants, which may have the capacity for a faster startup, can still require years to establish and are often situated near larger assembly plants, as noted by industry experts.
“I’m convinced that localization is the way, but localizing new models that are built somewhere else in the world doesn’t happen overnight,” stated Christian Meunier, chairman of Nissan Americas, in a Finance Newso interview. “Nissan is very fast, but it’s not going to be a matter of months. It’s a matter of years.”
Meunier indicated that Nissan plans to maximize production at its largest U.S. plant amid Trump’s tariffs but withheld any specific timelines regarding this objective.
This week, six prominent policy groups representing the U.S. automotive sector collectively called on the Trump administration to reconsider the forthcoming tariffs on auto parts, an unusual display of unity.
“President Trump has indicated an openness to reconsidering the administration’s 25 percent tariffs on imported automotive parts—similar to the tariff relief recently approved for consumer electronics and semiconductors. That would be a positive development and welcome relief,” their letter stated.
New plants
The quickest method to elevate U.S. production levels involves utilizing existing facilities with established supply chains, as Nissan intends to do.
In contrast, erecting new assembly plants is a more expensive route that may ultimately yield long-term benefits for local communities as suppliers adapt production to localize certain components.
A 2022 report from the Alliance for Automotive Innovation revealed that each direct job created in vehicle manufacturing supports an additional average of 10.5 jobs elsewhere in the American economy.
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The most recent addition to the U.S. automotive assembly landscape is Hyundai’s “Metaplant” in Georgia.
The $12.6 billion project, which President Trump has heralded as a triumph for American manufacturing, necessitated roughly two and a half years for construction, not accounting for the time spent on site selection, permitting, and other preparatory stages.
Hyundai’s timeline was notably efficient given the scale of investment and plant size, which boasts the capacity to produce 300,000 vehicles each year while providing approximately 8,500 jobs by 2031.
“If you’re building a brand new one, you’re going lightning fast to get it done in two years, and you have to have everything ready to go. More likely, it’s in the four-year type of range,” observed Mark Wakefield, a partner and global automotive market lead at consulting firm AlixPartners.
Stellantis, the parent company of Jeep and previously Fiat Chrysler, experienced a similar construction timeline, spending $1.6 billion to convert two powertrain plants into Detroit’s first new assembly plant in nearly three decades between 2019 and 2021.
There are notable instances where automakers have rapidly enacted significant changes, such as Tesla’s plant in China, which reportedly completed construction in less than a year in 2019, aided by support from Chinese authorities.
Quick actions
Besides establishing entirely new facilities, automakers can enhance U.S. production more swiftly and affordably through strategic use of existing resources and unused capacities across multiple sites.
Many manufacturers, including General Motors, utilize multiple production sites for their highest-demand products. For instance, GM produces the light-duty Chevrolet Silverado at plants located in Canada, Mexico, and the United States.
When Trump’s 25% tariffs on imported vehicles were enacted, GM announced plans to ramp up production of full-size pickup trucks at its assembly plant in Fort Wayne, Indiana, and bring on hundreds of temporary workers—an example of a relatively simple operational adjustment for the company.
Automakers typically strive to safeguard the production of their most profitable models. Historically, this effort has encompassed investing billions for plant renewals or even executing dual production runs for both older and newer models.
However, acting swiftly comes with its own risks. Ford, for example, invested $1 billion to completely retool its sole Illinois facility producing the Explorer SUV in a bid to minimize production downtime in 2019. While the transition took a rapid 30 days, the launch was fraught with issues that cost the company significantly in recalls and repairs—an experience Ford labeled “one of the most complex renovations in the company’s history.”
“Being out of production in a segment is devastating,” noted Betts, who has experience with both Apple and Stellantis.
He explained that many companies will pursue a “daisy chain” strategy, where they build a new plant for a new model while maintaining production of the existing models. This method facilitates an easier transition—but it demands adequate plant space and sufficient capital.
Furthermore, automotive firms require assurance that regulations and trade policies will remain stable during construction to avoid incurring unnecessary costs amounting to billions.
“It’s not a flip of the switch,” Swamy Kotagiri, CEO of the Canadian auto supplier Magna, remarked last week at an Auto Press Association meeting near Detroit. “We have to look at it from a pragmatic perspective. I don’t see how you can just pick up something and move. It sounds easy, but it’s not.”
