Automobile buyers looking to hook new wheels will probably face the shock of the label after the 25% tax of President Trump on imported vehicles and car parts.
The Trump rate on cars and light trucks will enter into force on April 3, while tariffs in certain automatic parts, including engines and transmissions, will enter into force no later than May 3.
Tariffs will have a radical impact on an industry that extends deeply in the economy, altering the supply chains of the companies on which consumers depend, economists said.
Approximately half of the 16 million cars, SUVs and light trucks that the Americans bought in 2024 were imports, the White House said on an information sheet on the rates. Vehicles in the United States are imported from Mexico, Japan, South Korea, Canada, Germany and other countries.
“If there is a rate, there is no way to avoid what it means,” said Mark Zandi, chief economist of Moody's Analytics. “O The vehicle manufacturer increases the price or suffer in the form of lower profits. Choose their poison.”
This is what you need to know:
Why does Trump impose tariffs on car manufacturers?
The Trump administration says it is imposing tariffs to strengthen national security and stimulate the growth of US jobs because car manufacturers would face more pressure to build plants in the United States.
“The United States cannot be a foreign manufacturing pieces assembler: we must become a manufacturing power that dominates each step in the supply chain of industries that are critical for our national security and economic interests,” said White House spokesman Kush Desai, in a statement.
The White House said the COVID-19 pandemic interrupted the automotive supply chain, forcing car manufacturers to reduce or delay vehicle production.
“You will see that prices go down, but specifically because they will buy what we are doing, encouraging companies and even countries to come to the United States and build,” Trump said Wednesday when he announced the tariffs.
But building more plants in the United States have been manufacturers of car and some companies could also be careful to change their supply chain to the United States due to regulatory uncertainty, economists said. Some speculate that Trump, which has backed away to impose tariffs before, could use tariffs as a negotiation tool to negotiate with other countries.
“Nobody will win from tariffs. Everyone will lose, but some companies will lose more than others,” said Ilhan Geckil, economist and managing director of Anderson Economic Group.
How much will car prices increase due to rates?
Estimates vary according to the vehicle, but most industry experts predict that new cars will cost several thousand.
Even if a car is manufactured in the United States, tariffs also apply to certain imported auto parts from other countries.
Automobile manufacturers also have to achieve a delicate balance because the price of a car too high could lead consumers to delay the purchase of a new vehicle.
Erin Keating, executive analyst at Cox Automotive, said consumers can expect a price increase from 15% to 20% in new vehicles affected by rates.
Even if they are not affected, vehicles are expected to increase by 5%, he added.
“As more people enter the market and start looking for vehicles, and there is competition with vehicles that have a higher price, then the market will potentially have higher costs and, therefore, will see that other vehicles increase in price and used car vehicles,” he said.
Zandi said consumers could see that car prices increased between $ 5,000 and $ 10,000.
Anderson Economic Group estimated in February after Trump announced a tariff on the imports of Canada and Mexico that consumers could see a price increase of between $ 4,000 and $ 10,000 for most new vehicles and $ 12,000 or more for electric vehicles.
What car brands will be more affected by rates?
European cars and manufactured in European could be beaten stronger than vehicles produced in the United States, but it also depends on how much the car manufacturer imported from other countries depends, according to Anderson Economic Group.
Tesla, for example, makes its cars in the United States, but the company also depends on foreign pieces to build its vehicles.
“It is important to keep in mind that Tesla is not unscathed here. The tariff impact on Tesla remains significant,” Elon Musk tweeted this week.
Other automobile manufacturers such as Toyota, Volkswagen, Hyundai and General Motors make their cars both in the United States and other countries.
The executive director of General Motors, Mary Barra, said during the quarterly gains of the company in January, the company builds trucks in Mexico, Canada and the United States.
“With respect to possible rates, we are working on our supply chain, logistics network and assembly plants so that we are prepared to mitigate short -term impacts,” he said during the call.
Hyundai Motor Group said it has been expanding US production to 1.2 million vehicles in Alabama and Georgia.
What about car dealers? How will they be affected?
If consumers delay the purchase of a new vehicle due to the highest prices, that could cushion sales in dealers.
Juri Klaric, sales manager of a Volvo dealer in Torrance, said the tariffs are so new that his business will have to wait to see what happens.
“It's a bit unknown, with all honesty,” Klaric said.
In the nearby Martin Chevrolet dealership, sales teams are preparing and waiting for an employed weekend while buyers rush to ensure lower prices, said sales manager Stuart Monterroso.
But it is also too early to guess how much car sales in concessionaires will reach.
“The pieces come from everywhere: logistics is massive,” he said.
