The United Auto Workers union, and many of its members, have publicly agreed with President Donald Trump’s decision to slap 25% tariffs on all imported cars.
But about 900 UAW members will start paying the price for those tariffs starting Monday.
That’s how many hourly workers at five US Stellantis plants will be laid off for two or three weeks because their jobs producing powertrains and stampings for plants in Canada and Mexico have been temporarily idled due to the tariffs.
The layoffs could be a sign of things to come. Since the North American Free Trade Agreement (NAFTA) went into effect 31 years ago, the auto industry has operated as if the US borders with Canada and Mexico did not exist. Components moved freely and frequently between the three countries as they assembled cars, as automakers built millions of vehicles destined for US dealerships at Mexican and Canadian plants.
But those assembly plants north and south of the border were often supplied by American factories. Shutting production at those plants will mean the plants that produce those parts are also at risk.
Three of the Stellantis plants starting layoffs are in Kokomo, Indiana, an island of auto factories amidst a sea of farm fields in the northern part of the state. There are no cars assembled in Kokomo, but there about 5,000 workers building transmissions and engines there, supplying auto plants to all three countries.
Union members there, even if they agree with the idea of tariffs and their union support of the Trump administration’s policies, are nervous about what the future will bring, said Denny Butler, vice president of one of the three union locals in town.
‘It’s scary’
Trump argues that too many auto jobs have been moved to foreign countries in past decades at the cost of American auto jobs. He predicts that automakers would quickly respond to the 25% tax he is imposing on imported cars by shifting production back to American factories.
Butler said he and other autoworkers are very nervous about what happens to jobs in Kokomo as a result, not just from this current round of layoffs but in future months and years. There were already 400 UAW members on indefinite furlough in Kokomo even before Monday’s layoffs.
“Right now, there’s a ton of unknowns,” he told CNN. “I’m afraid this is a sign of things to come for a while. It’s scary.”
He agrees that NAFTA hurt autoworkers by encouraging automakers to build plants in Mexico to take advantage of low wages there. The union’s parking lot contains a warning sign that non-union cars, such as those built in Mexico, will be towed.
But he said he didn’t believe the plants will quickly return just because tariffs are in place.
“This has been going the wrong direction for a long time,” he said. “I agree with the rationale behind the tariffs. But I understand the company’s position. You can’t expect them in a couple of weeks to pick up a plant and bring it here from another country. The company is limited in what it can do immediately.”
Butler estimates that about 330 members in Kokomo were laid off due to the temporary pausing of production at the Canadian plant in Windsor, Ontario, which builds Chrysler minivans, as well as the plant in Toluca, Mexico, which builds the Jeep Compass small SUV and the electric Jeep Wagoneer S. There are no US plants that builds those models, so shifting production to any US plant would take some years.
Stellantis said the current shutdowns in Canada and Mexico and the US layoffs are only short-term, but that it can’t say what will happen in the longer term.
“These are actions that we do not take lightly, but they are necessary given the current market dynamics,” said Antonio Filosa, chief operating officer for the Americas for Stellantis, in a memo to employees on Thursday.
“We understand that the current environment creates uncertainty. Be assured that we are very engaged with all of our key stakeholders, including top government leaders, unions, suppliers and dealers in the US, Canada, and Mexico, as we work to manage and adapt to these changes.”
The 900 US layoffs were blasted by UAW President Sean Fain, who grew up in Kokomo and followed the footsteps of his grandparents in working at one of the plants. A harsh critic of Trump on many issues, Fain has endorsed the tariffs and told CNN that automakers like Stellantis should move more quickly to bring jobs back to America than they have.
“It’s more of the same from Stellantis, unfortunately,” he told CNN Thursday, the day the layoffs were announced. “Stellantis, which has had several months to prepare, announces it will use employees as collateral damage.”
But the options for Stellantis are not good ones. If it assumes the cost of the tariffs on cars assembled in Canada and Mexico, vehicle production will become unprofitable. If it charges customers the full cost of the tariffs, it will probably price them out of the market. Alternatively, automakers could simply decide to no longer build those models.
Butler said the uncertainty of what Stellantis will do is what makes this such a scary time for workers in Kokomo.
“Thinking these companies are going to pick up car plants and bring them back to the United States in the next couple of months and everything will be fine … I don’t see that happening,” said Butler. “That’s what scares me.”
Even more jobs at risk in Canada, Mexico
Things are even scarier for workers at the Mexican and Canadian plants. There are more than 4,500 union members at the Windsor plant, and about 2,400 hourly workers at the Toluca plant.
“Unifor warned that US tariffs would hurt autoworkers almost immediately and in this case the layoffs were announced before the auto tariff even came into effect,” Lana Payne, president of Unifor — the union that represents Canadian autoworkers, among others — said Thursday in a statement.
“Trump is about to learn how interconnected the North American production system is the hard way, with autoworkers paying the price for that lesson,” she said.
Derek Gungle, who has worked at the Stellantis Windsor plant for more than 10 years, said he used to frequently attend baseball games and concerts in Detroit, which is located a few minutes away from the plant. “I even go over for lunch sometimes,” he said.
But he feels a sense of distance from the US since talk of the tariffs started following Trump’s return to office. He’s hoping that Canada and the United States can quickly reach a deal to end tariffs on the vehicles that his and other Canadian plants build. He points out that the tariffs go against the terms of the US-Mexico-Canada Agreement (USMCA) that Trump negotiated in his first term to take the place of NAFTA.
“How do we trust anything that comes out of this administration?” he asked.
For now, his regular trips to Detroit are on hold.
“Why would I support an economy that doesn’t want to support me?” he said. “I‘m going to be OK in the short term. The real concern is the long term. Right now, most of the city is either going to be on layoff or impacted in some other way. These last few months have been exhausting. I guess we’ll all take a breath and see what happens in next week or two.”
