American drivers were already being squeezed before the tariffs landed.
Poised to Go Up
Bloomberg discusses Why Trump’s Auto Tariffs Are Poised to Drive Up Car Prices
President Donald Trump is betting that tariffs on imports of vehicles and automotive parts will bring more manufacturing to US shores.
Shifting production of more of those parts to the US would be an expensive transition for carmakers. American consumers are likely to feel the pain too, as tariffs are widely expected to push up vehicle prices by thousands of dollars.
Jim Farley, Ford’s chief executive officer, took the pushback a step further. Lowering tariffs on Japanese imports, he says, puts Ford’s US-made vehicles at a major cost disadvantage, to the tune of about $5,000 when comparing a Ford Escape small SUV made in Kentucky with a competing Toyota Rav4 built in Japan. (Toyota also builds Rav4s for US consumption in Ontario, Canada and Kentucky.)
How reliant is the US on auto imports?
Very. Around 50% of the roughly 16 million new passenger vehicles sold in the US in 2024 were assembled outside of America, according to automotive researcher GlobalData. Most of those imports came from five countries: Mexico, Japan, South Korea, Canada and Germany.
In percentage terms, 46% of GM’s US sales come from imported cars. That leaves the company more exposed to tariffs than its fellow Detroit automakers — Ford and Stellantis — but better positioned than most of its European and Asian rivals.
Toyota is the second-biggest importer of cars into the US, leaning on these shipments for just over half of its US sales. The carmaker imported 1.2 million vehicles into America last year, including more than 500,000 from Japan. Hyundai, meanwhile, sent 1.1 million vehicles to the US last year — including Kia and Genesis branded models — which accounted for almost two-thirds of its American sales. The vast majority of those cars came from its home country, South Korea.
Is there such a thing as a 100% made-in-America vehicle?
No. A substantial portion of the content in vehicles built in the US comes from factories abroad. A White House fact sheet said a conservative estimate of the average share of foreign content is 50%, but that the true figure is likely to be closer to 60%.
How have automakers reacted to Trump’s tariffs?
Many withdrew their financial forecasts for the year due to tariff uncertainty. Some, such as Jeep maker Stellantis, have paused production in Canada and Mexico, while others have announced plans to increase manufacturing in the US. GM, for example, plans to spend $4 billion to boost production at its US factories over the next two years, trimming its exposure to imports from Mexico.
How will Trump’s tariffs impact car prices in the US?
American drivers were already being squeezed before the tariffs landed. The average sticker price of a new passenger vehicle in the US was around $47,500 as of March, a 22% increase from five years earlier, according to data from valuation specialist Kelley Blue Book. As car prices have risen and high interest rates have made for expensive financing, delinquencies on auto loans were hovering near their highest level in more than 30 years in March.
Auto Tariffs Threaten to Make Cars Less Affordable in the US
The new-vehicle average transaction price was already $47,462 in March 2025, some 22% higher than five years earlier
And now import taxes have been added to the mix, threatening to drive vehicle prices up even further. Automakers and parts manufacturers can absorb some of the added costs, but in most instances, at least some of the extra expenses will eventually be passed on to consumers.
How long will it take for tariffs to impact car prices in the US?
Any price increases may not materialize immediately, as dealers typically stock two to three months’ supply of new cars. That said, the rush to buy vehicles ahead of the new import taxes kicking in has reduced pre-tariff inventories more quickly than usual, which could lead to a summer sticker price shock.
Higher prices won’t just be a new car problem. As prices climb for vehicles fresh off the assembly line, many buyers will likely look for second-hand alternatives, pushing up the prices of those too. And with auto parts due to join the tariffs mix, repairs will get even more expensive and insurance premiums could rise as well to cover the higher breakdown costs.
How easy is it to shift auto production to the US?
There won’t be an immediate surge in US car manufacturing. While carmakers can look to increase output at their existing American plants, new factories — for both vehicle assembly and parts production — would require billions of dollars and take years to complete. It’s also an expensive process to wind down plants elsewhere.
The Idiocy of It All
Bringing production back to the US is guaranteed to be costly. Eventually consumers will pay that price.
Q: Will the move create any jobs?
A: No
In isolation. perhaps there are a few more auto manufacturing jobs. However, higher prices tend to mean fewer sales and fewer workers.
Also if consumers spend more on cars they will spend less elsewhere. And insurance costs rate to go up with sales price.
Millions of people will take a hit on car prices and insurance.
It’s an idiot’s mission to believe higher prices are a benefit. But barring a demand collapse due to recession, higher prices are coming. And don’t rule out stagflation.
Thank Trump.
Related Posts
July 22, 2025: GM Profit Down 35 Percent Due to $1.1 Billion Tariff Hit
The next quarter will be worse says CEO Mary Barra.
August 1, 2025: Payroll Disaster, Jobs Rise 73,000 but Massive Negative Revisions
There were 258,000 negative revisions in May and June.
August 5, 2025: ISM Services Prices Increase 98 Straight Months, Highest Since Oct 2022
The services index is barely above contraction. Prices are another matter.
August 5, 2025: Troubling Trends in Student Loans, Auto Loans, and Credit Card Late Payments
90-day late payment delinquencies are elevated and rising.
