The US has imposed a 25% tariff on imported vehicles and auto parts, sparking concerns over the impact on new car prices. President Trump claims this move will spur investments in U.S. factories and create jobs, but analysts argue that consumers will bear the brunt of higher costs.
Starting May 3, the duty applies to all cars assembled outside the US, with partial exemptions for those made in Mexico or Canada under free trade agreements. This exemption affects vehicles like the Chevrolet Equinox, which has a battery pack sourced from the US despite being assembled in Mexico.
However, cars produced in states such as Michigan and Tennessee will be hit harder due to the high percentage of foreign-made components. About 90% of some Mercedes-Benz models made in Alabama are imported parts.
The tariffs will vary by vehicle, with those manufactured abroad facing higher duties. The Tesla Model Y and Honda Passport, which have higher US-made content, will incur lower tariffs. Conversely, cars like the Toyota Prius made in Japan or Porsche sports cars made in Germany will face steeper costs.
As a result, even non-car buyers will feel the pinch due to increased prices for tires, brake pads, and oil filters. Auto repair shops are expected to pass on the costs, with some warning that this is unsustainable. The tariffs may also push up used car prices as demand increases and new vehicles become less affordable.
Source: https://www.nytimes.com/2025/04/03/business/trump-auto-tariffs-car-prices.html