US President Donald Trump and his allies provided solutions to avoid price increases due to tariffs on his car: Buy Americans.
Trump told NBC News on March 29 that if foreign automakers raised prices in response to tariffs, they “we couldn’t have been too concerned.” “If that’s the case, people are going to buy American-made cars,” Trump said. “We have a lot.”
The administration’s 25% tariff came into effect on April 3, with additional tariffs on imported auto parts set to come into effect on May 3.
Customs duties are taxes on imports paid by businesses. Their costs are often handed over to consumers at a higher price.
Fox News host Jesse Watters issued a similar statement to Trump on April 3rd. Watters temporarily provided employees’ car rates to its customers, citing a clip from a Ford Motor Co promotion.
Ohio Republican Sen. Bernie Moreno used to repeat Trump in an April 2nd interview with CNN, as he owned multiple car dealers before taking office.
Moreno says, “Mostly damaged ones are cars made overseas and only cars shipped to the US. Super luxurious cars.”
However, this contradicts an analysis by research firm Cox Automotive, which found that “25% tariffs on imported vehicles apply to almost 80% of vehicles under $30,000.” This analysis cited models such as the Honda Civic, Toyota Corolla, Chevrolet Trucks, Trail Blazer, Nissan Centra, and Honda HR-V.
Senator Moreno added, “When a mainstream car, Honda, Toyota, Subaru, Ford, Chevrolet – one car goes up, there are tariffs, so that person will just buy another person who doesn’t have your tariffs.”
Many car experts said it’s not so easy to avoid price increases by purchasing a US car, as cars assembled in the US also use imported parts.
“The concept of an American-made car with all the parts in the US is a fictional story,” said Daniel Ives, senior equity analyst at Wedbush Securities. “They do customs on those parts.”
Automobile companies rely on imported parts to varying degrees. For example, the Tesla Model Y has 70% of the value of that portion made in the US or Canada. For the Ford F-150, it is 45%.
The Trump administration said it could cut other federal taxes by increasing revenue through tariffs. But economists say high tariffs are unlikely to generate enough income to bring about meaningful tax cuts for typical Americans.
In response to a political email asking about Moreno’s statement on US-made cars, a senator spokesman attacked the publication and provided no answers to questions about cars or tariffs. When contacted, the White House said some auto parts were exempt from customs duties.
Many US automakers use imported parts
Moreno said that a US-assembled vehicle that acquires parts from Mexico and Canada will be “completely tariff-free” if it complies with the US Mexican-Canada agreement negotiated by the Trump administration in 2018.
However, many of the auto parts used in the US come from countries other than Mexico and Canada.
Jason Miller, a Michigan State University professor of supply chain management, investigated car rate data and told Politifact that Mexico’s imported auto parts “apparently top of the list.” China is the second (because it’s lithium-ion batteries), Japan is the fourth, Korea is the fifth, and Germany is the sixth.
Miller said Trump’s other tariffs on steel and aluminum still mean that even if the car is 100% assembled from domestic components alone, costs will still rise as steel and aluminum prices are rising in the US.
“They’re not only oversimplifying things, they’re lying entirely,” Miller said of people who say that car shoppers can buy all US-made cars. He also said that not all auto parts in Mexico are subject to tariffs as they are not compliant with the US-Canada agreement.
“All vehicles use at least some foreign parts. Duration. No vehicle models use 100% American-made parts,” said Amy R Bloglyn Peterson, supply chain management expert at Michigan State University.
On April 4, the Wall Street Journal reported that at first glance, Ford is in the best position for weather duties, as 80% of the cars, pickup trucks and SUVs sold in the US are manufactured domestically, and many parts are manufactured as well.
Many components of Ford’s F-150, such as alternators and wheels, come from other countries, and from May these parts could face a new 25% tax. The Wall Street Journal writes, “Even though Ford trucks are being built in Heartland, America, import duties can increase the average price by thousands of dollars.”
The National Highway Traffic Safety Administration (NHTSA) publishes data on U.S. and Canadian content based on the value of the parts used to assemble U.S. and foreign passenger cars. The data shows that Toyota’s automobile lines built in the US, such as the Corolla, contain at least 25% of parts imported from Japan.
A Toyota spokesperson said 47% of vehicles sold in the US in 2024 were built in the US.
USA Today analyzed NHTSA data from multiple automakers and found that “all models assembled and sold in the US are 47% (by value) of parts derived from the US or Canada.”
A spokesperson for Cox Automotive said that the average US-made vehicle has around 50% of the parts or components depending on the value imported.
Car prices could rise due to Trump’s tariffs
The long-term impact of tariffs on the automotive industry, which is difficult to predict. Cox Automotive predicted strong sales until pre-duty inventory declined.
“But all roads lead to this fact. We expect US vehicle prices to rise over the coming months and years as new tariffs are aligned,” Cox wrote in its April 4 Market Insights Report.
Cox predicted that vehicles affected by these tariffs would rise by 10%, with prices rising by 15%, and at least 5% for vehicles not subject to full tariffs.
“Production disruption and decline could become a reality this summer, especially as automakers and suppliers work to align their practices with new rules,” Cox wrote.
As prices for foreign-manufactured cars rise, competing US model producers with fewer imported parts will likely raise prices of 40 cents per cent, rather than dollars in dollars.
“The US automakers are damaged and will raise prices as much as possible,” Hufbauer said.
Louis Jacobson contributed to this article.
Source link
