The auto industry trade war exploded Thursday. Stellantis announced 900 job cuts across five U.S. plants. The company blamed Donald Trump’s steep new tariffs.

These temporary layoffs hit factories that supply parts to Mexico and Canada. Because of rising costs, Stellantis also shut down two major assembly plants.

One is in Toluca, Mexico. The other is in Windsor, Ontario. Both are key to Stellantis’ North American strategy.

Shutdowns Hit Mexico and Canada Hard

Stellantis halted Jeep production in Toluca for the entire month of April. Even though employees will still report to work and get paid, no cars will be made.

Meanwhile, the Windsor plant will pause operations for two weeks. This facility builds the Chrysler Pacifica and Dodge Charger Daytona. Over 4,500 workers will feel the impact immediately.

Instead of ramping up output, the plants have gone dark.

Trump’s 25% Tariff Fuels Panic

Trump’s 25% tariff on imported vehicles triggered the chaos. It applies even to U.S. allies like Canada and Mexico.

Before this, automakers paid just 2.5%. That’s a tenfold increase overnight.

Although companies can deduct the value of U.S.-made parts, most modern cars rely on global supply chains. Because of that, costs are now soaring.

Prices Will Climb As Costs Surge

Auto experts say the fallout will land directly on buyers. Car prices could spike by $5,000 to $10,000 in the coming months.

Stellantis was already under pressure. Last year, profits plunged by 70%. Now, the stock has dropped again—falling 7.2% on Thursday.

With inflation rising and consumer budgets shrinking, the company faces a perfect storm.

Internal Memo Reveals Bigger Trouble

Stellantis COO Antonio Filosa sent a memo to staff. He explained the company’s decision. He said they had no time to wait.

Filosa warned that more changes could come. Plants supporting the closed facilities would also feel the effect. He urged workers to brace for more disruptions.

Clearly, the auto industry trade war is hitting fast and deep.

CEO Elkann Takes Heat Early

New CEO John Elkann didn’t expect a crisis this soon. He took over the company just months ago. But the tariff chaos forced him into emergency mode.

Earlier this year, Stellantis paused work on the next-gen Jeep Compass. Retooling of the Brampton, Canada plant was also frozen. Those decisions now seem like early warning signs.

Unfortunately, the trade war may stretch these delays much longer.

Unions Rip Stellantis For Cutting Jobs

UAW President Shawn Fain didn’t hold back. “Stellantis continues to play games with workers’ lives,” he said in a sharp statement.

Fain called the layoffs unnecessary. He said Stellantis has enough money, product, and factory space to hire more people—not less.

So far, Canadian labor leaders have remained silent. But that could change if job losses mount.

Biden Administration Stays Quiet

The White House has not responded to Stellantis’ layoffs. But other automakers are now reassessing their plans. The tariff ripple effect could spread across the industry.

Even Tesla isn’t immune. Around 40–50% of the parts in its U.S.-made vehicles still come from abroad.

In this fight, no brand is truly protected.

Wall Street Rings the Alarm Bell

Top analyst Dan Ives from Wedbush didn’t sugarcoat it. He called the new tariffs “a debacle of epic proportions.”

He warned that demand for new cars could drop up to 20% next year. And prices? They’ll keep climbing.

Ives said the idea of building a car with only U.S. parts is “a fictional tale.” He doesn’t see a way to avoid serious damage.

Global Supply Chains Take the Hit

The auto world doesn’t build cars in one country anymore. Every model is a mix of parts and software from around the globe.

Shifting those supply chains will cost billions. It could take years to rebuild. And during that time, production will slow.

Ives estimated the global auto sector will pay $100 billion more each year if tariffs stay in place.

Auto Industry Trade War Keeps Escalating

At this rate, there’s no end in sight. Tariffs are up. Jobs are down. And car prices are about to explode.

Unless a deal is struck or policies shift, the auto industry trade war will keep shaking markets.

For workers and consumers, the road ahead looks rough.