Car buyers who seek to hang new wheels will probably face the shock of stickers after the 25% tax of President Trump on imported vehicles and automotive parts are triggered.
Trump's price On cars and light trucks that should take effect on April 3, and prices on certain automotive parts, including engines and transmissions, will take effect no later than May 3.
The prices will have a radical impact on an industry that runs deeply in the economy, upsetting the supply chains of the companies on which consumers depend strongly, economists said.
About half of the 16 million cars, SUVs and light trucks that the Americans bought in 2024 were imports, said the White House information sheet on prices. Vehicles In the United States, the United States is imported from Mexico, Japan, South Korea, Canada, Germany and other countries.
“If there is a price, there is no way to avoid what it means,” said Mark Zandi, chief economist of Moody's Analytics. “Either the vehicle manufacturer increases the price, or it suffers in the form of lower profits. Choose your poison. ”
Here is what you need to know:
Why does Trump impose prices on car manufacturers?
The Trump administration says that it imposes prices to strengthen national security and stimulate the growth of American jobs because car manufacturers would be confronted with more pressure to build plants in the United States.
“America cannot simply be an assembler of parts made abroad – we must become a manufacturing power which dominates each stage of the industry supply chain which is essential for our national and economic security interests,” said the White House spokesman Kush Desai, in a press release.
The White House noted that the COVVI-19 pandemic had disrupted the automotive supply chain, forcing car manufacturers to cut or delay the production of vehicles.
“You will see the prices drop, but in particular because they will buy what we do, encouraging businesses and even countries to come to America and build,” said Trump on Wednesday when he announced the prices.
But to build more factories in the United States takes years of car manufacturers, and some companies may also be wary to move their supply chain to the United States due to regulatory uncertainty, economists said. Some speculate that Trump, who has already returned to the imposing prices, could use prices as a negotiation tool to negotiate with other countries.
“No one is going to earn prices. Everyone will lose, but some companies will lose more than others,” said Ilhan Geckil, economist and managing director at Anderson Economic Group.
How much will the prices of cars increase due to the prices?
Estimates vary depending on the vehicle, but most industry experts predict that new cars will cost several thousand others.
Even if a car is made in the United States, prices also apply to certain automotive parts imported from other countries.
Car manufacturers must also find a delicate balance, as the price of a too high car could encourage consumers to delay the purchase of a new vehicle.
Erin Keating, an executive analyst of COX Automotive, said that consumers can expect a price increase of 15% to 20% on new vehicles affected by prices.
Even if they are not affected, vehicle prices should increase by 5%, he added.
“While more and more people are entering the market and start to look for vehicles, and there is competition with vehicles that must be higher, then the market will potentially support higher costs, and therefore you will see other vehicles increasing prices as well as used car vehicles,” she said.
Zandi said consumers could see car prices increase between $ 5,000 and $ 10,000.
Anderson economic group Estimated in February after Trump announced a rate on imports from Canada and Mexico, consumers may see a price increase between $ 4,000 and $ 10,000 for most new and $ 12,000 vehicles for electric vehicles.
What car brands will be the hardest affected by the prices?
European cars and manufactured by Asia could be struck stronger than vehicles produced in the United States, but it also depends on the quantity of car manufacturer on parts imported from other countries, according to Anderson Economic Group.
Tesla, for example, manufactures its cars in the United States, but the company is also based on foreign parts to build its vehicles.
“Important to note that Tesla is not unscathed here. The price impact on Tesla is still significant,” said Managing Director Elon Musk tweeted this week.
Other car manufacturers such as Toyota, Volkswagen, Hyundai and General Motors make their cars in the United States and other countries.
General Motors’s general manager Mary Barra said at the company's quarterly call in January, the company built trucks in Mexico, Canada and the United States.
“With regard to possible prices, we work in our supply chain, our logistics network and our assembly factories so that we are ready to mitigate the short-term impacts,” she said during the call.
Hyundai Motor Group said that it extended American production to 1.2 million vehicles in Alabama and Georgia.
What about car dealerships. How will they be affected?
If consumers delay the purchase of a new vehicle due to higher prices, this could mitigate sales from dealerships.
Juri Klaric, sales director for a Volvo dealer in Torrance, said the prices are so new that their business will have to wait to see what's going on.
“It's a bit unknown, honestly,” said Klaric.
At the Martin Chevrolet dealer nearby, the sales teams are preparing and hope for a busy weekend while buyers rush to obtain lower prices, said sales director Stuart Monterroso.
But it is also too early to guess how much prices will reach automobile sales among dealerships.
“Parts come from everywhere-logistics is massive,” he said.
