A single auto part’s journey to illustrate how tariffs could increase car prices highlights the complex supply chain of North America. If components are taxed at every stop, it can have significant effects on the US auto industry.
The US proposes tariffs on goods from Mexico and Canada. This proposal could impact car manufacturers by increasing production costs. To understand this effect, let’s look at how an auto part travels across North America before being used in a vehicle.
Once a component is extracted, it moves to different locations throughout the region for processing. These include countries such as Canada and Mexico. The possibility of tariffs being applied to these goods can cause problems if they are taxed multiple times. This could lead to increased production costs for US car manufacturers.
Higher production costs often translate into higher prices for consumers. As a result, car buyers may see significant price hikes when purchasing their next vehicle. Some economists worry that such price increases could contribute to economic instability and even a recession.
Source: https://www.washingtonpost.com/business/2025/03/02/tarrifs-auto-industry-car-parts-cost