Trump Tariffs Could Drive up US Car Prices by Thousands of Dollars
Ford chief believes prolonged period of increased tariffs on imports from Canada, Mexico and China could hobble U.S. auto industry
Car prices could become the first U.S. sector to feel the pressure of the increased tariffs President Donald Trump has slapped on three of the country’s biggest trade partners take effect.
Trump’s long-threatened tariffs on imports from northern and southern neighbors Canda and Mexico and archrival China got rolling on March 4, 2025.
Ford Motor Company CEO Jim Farley believes the increased tariffs could have a major impact on the U.S. car market. Farley said in an earnings call with analysts that a prolonged period of higher tariffs would wipe out the company's profits, push up vehicle prices and even slow down economic growth.
"There is no question that tariffs at 25% level from Canada and Mexico, if they're protracted, would have a huge impact on our industry with billions of dollars of industry profits wiped out and adverse effect on the U.S. jobs as well as the entire value system in our industry," Farley said. "Tariffs would also mean higher prices for customers."
Impact of broad-based tariffs
A report in cbsnews.com says the new tariffs could drive up automobile costs for U.S. consumers by thousands of dollars and dent U.S. car sales.
The 25% tariffs on goods from Canada and Mexico, as well as an additional 10% tariff on imports from China, could drive up car costs by as much as $12,200 for some models, the report says citing Anderson Economic Group (AEG), a Michigan-based economic consultancy.
The newly imposed tariffs are broad based and could fuel prices of several input components that go into the auto industry production cycle. The key auto segments likely to be affected include SUVs, small cars and electric vehicles, AEG's analysis shows. Car prices are already close to the record level of $50,000 and further increase of the sticker prices would hit the market for price-weary customers.
AEG CEO Patrick Anderson says the Trump tariffs-forced price hikes are likely to be substantial enough that some car buyers might balk at the higher costs. "Our analysis shows the proposed tariffs would have a very big effect on North American assembled cars by multiple automakers," CBS MoneyWatch quoted Anderson as saying.
He added, "These are cost increases that cannot be hidden from the consumer. Substantial portions, or perhaps all of it will be passed along to consumers, or manufacturers will stop producing them."
Experts suggest some of the price sensitive product lines could cease production from the tariff rise impact. “Some product lines and equipment combination could become uneconomical for automakers to continue producing,” he noted. "It would be a huge disruption to the industry," Anderson said.
AEG’s analysis shows the added costs of vehicles could be range between $4,000 and $10,000. Higher cost of components from China could push up the price of electric vehicles by as much as $12,200.
