DETROIT – The automotive industry is facing a significant challenge with the announcement of 25% tariffs on imported vehicles. President Donald Trump claims this move will boost U.S. manufacturing and encourage companies to relocate operations to the United States.
Overnight, a billboard message on I-94 from the Canadian government stated that tariffs are essentially a tax.
Rana Foroohar, associate editor at the Financial Times, warned, “If tariffs hold, you are going to see increases on automotive prices.”
Most economists predict that Americans will experience sticker shock if the president follows through with the newly announced auto tariffs. A proclamation signed Wednesday indicates that the tariffs will impose 25% duties on imported assembled vehicles starting April 3. Tariffs on parts are set to begin no later than May 3.
Mary Lovely, a senior fellow at the Peterson Institute for International Economics, stated, “Americans will keep their cars longer. They’ll have to. They won’t be able to afford them. They’ll also have a lot less choice.”
Analysts anticipate price hikes on American-made cars due to the tariffs on parts. However, the White House has noted that parts complying with the U.S.-Mexico-Canada Trade Agreement will receive a temporary exemption.
Eventually, it’s estimated that the cost to produce a vehicle in the U.S. could rise by up to $12,000. Lovely explained, “It may fall in the first instance on the American manufacturer, who buys the input, who may then pass it on to the consumer, or it is passed through directly through the retail chain to the American consumer.”
President Trump disagrees with the predictions of rising prices, asserting, “You’re going to see prices going down. Business is coming back to the United States so that they don’t have to pay tariffs.”
Meanwhile, the United Auto Workers (UAW) is applauding the tariff announcement, stating that these tariffs could create or reinstate jobs in the U.S. In a statement, the UAW wrote, “With these tariffs, thousands of good-paying blue-collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants. Right now, thousands of autoworkers are laid off at Ford, General Motors, and Stellantis following recent decisions by auto executives to ship jobs to Mexico.”
