President Donald Trump’s trade war with Canada is sending shockwaves through the American automotive industry, which has long been heavily interconnected with manufacturing north of the border.

In August, Trump announced a new 50% tariff on all cars, trucks and auto parts manufactured in Canada, as well as on Canadian steel, to take effect on Jan. 1, 2027. That would double the current 25% tariff on cars manufactured in Canada that Trump imposed last year.

The current tariffs regime is already costing Americans: CBT News, a website for automobile retailers, reported in March that the average price of a new car had increased by 10% since the introduction of Trump’s tariffs. Prices for  vehicles manufactured in the United States rose as well, in part due to tariffs on imported materials used in their production.

Parts and vehicles compliant with the United States-Mexico-Canada Agreement (USCMA) on trade have so far been exempt from those added tariffs; the 25% duty has applied only to the components of automobiles that originate outside of the U.S. Trump’s new proposed tariffs may not have exemptions for USCMA-compliant parts, auto industry expert Patrick Anderson told the Michigan Independent, which would cause a lot of pain and raise costs for automotive manufacturers.

“States like Michigan and the Canadian province of Ontario have tremendous cross-border trade on a regular basis, and Americans are used to buying cars that are either assembled in Canada or have parts from Canada, or both, and considering them American cars, because they are American cars,” said Anderson, CEO of the auto industry consulting firm Anderson Economic Group. “They’re built by American companies, sold in the United States by American dealers, often designed in the United States, and with a substantial portion of the components from the United States, and also having some parts or entire assemblies put together in Canada.”

Last year, before the latest spat between Trump and Canada, the Wall Street Journal tracked the assembly process for a single component of an automobile transmission that involved six border crossings of materials and parts between the U.S. and its northern neighbor, as well as one crossing from Mexico to the U.S. The transmission module was finally put into a vehicle at a plant in Ontario before being shipped back to the U.S. one last time for sale.

“The potential for a 50% tariff on autos and auto parts would be catastrophic for much of the Canadian auto industry and for many American companies and workers as well, because so much of the automobile industry in the United States depends on the ability to trade with Canada on an almost seamless basis for autos and auto parts,” Anderson said. “If in fact there was a 50% tariff put on, you would see entire factories closed on both sides of the border, and you would see layoffs in many companies, including a lot of small companies, throughout Michigan, Ohio, Illinois, Indiana and Texas.”

Even if the planned tariffs were canceled tomorrow, damage is already being done to the industry, said Rudi Leuschner, associate professor of supply chain management at Rutgers University Business School in New Jersey.

“Executives hate uncertainty, and that’s all it introduces at this point to the individual companies,” said Leuschner told the Michigan Independent. “We would like to have a planning horizon, and we know that if we make a certain decision, it’s going to be the ideal decision for at least the foreseeable future. And all of this talk of tariffs on, tariffs off is just making planning a lot harder.

“Because they have not yet hit, and we haven’t yet seen them, we also have to factor in there, there’s a chance that they never take place,” Leuschner continued. “So at this point, there’s going to be a whole bunch of people who are scrambling, and there’s going to be a whole bunch of people who are making alternative plans that we may never have to use.”

“Unfortunately, you have the prime minister of Canada, the premier of Ontario, and the president of the United States all talking in trade war rhetoric that could, if it was actually converted into policy, end up throwing thousands of people out of jobs,” Anderson said. “That uncertainty and that harshness does not support employment on either side of the border, and makes companies very reluctant to invest in the kind of plant equipment and technology that would improve our ability to build cars here in America.”