President Trump on Wednesday announced 25% tariffs on vehicles and auto parts imported into the U.S. The new duties could lead to sticker shock on a wide range of automobiles for American consumers, including those manufactured here in the States, analysts say.
Few vehicle manufacturers will be spared by the fresh levies, which are aimed at revitalizing domestic automobile manufacturing. Industry analysts say the tax will surely raise car prices in the U.S. and squeeze some would-be car buyers out of the market.
Some manufacturers could move a share of production to the U.S., but it would come “at the expense of reduced competition, higher prices, and significantly lower production in the U.S.’s main trading partners,” Oxford Economics analyst Abby Stamp said in a research note.
The automobile supply chain is highly complex and intertwined with the economies of Mexico and Canada, from which American brands source finished vehicles and parts. Mr. Trump’s tariff on passenger cars and light trucks imported into the U.S. will go into effective April 3, according to the executive order, and a 25% tariff on auto parts shipped from foreign countries, goes into effect “no later than May 3.”
While all car manufacturers will be impacted by the new tariffs, according to analysts, some will be hit much harder than others.
Tesla
Tesla CEO Elon Musk, a close ally of Mr. Trump, posted on X Wednesday that the new tariffs would even affect the American-manufactured electric vehicles.
“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” Musk wrote on X Wednesday. “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial,” he wrote in a later post.
That said, Tesla is expected to be among the car brands least affected by the tariffs, given that the cars are made in the U.S., and most of their parts are sourced domestically, too. The EV brand does, however, rely on China for some batteries, “so the tariffs will have an impact,” Art Wheaton, a transportation industry expert and director of labor studies at Cornell’s School of Industrial and Labor Relations, told CBS MoneyWatch.
Tesla rival Rivian could also be spared for similar reasons, according to UBS.
“We believe TSLA and RIVN could fare better as 100% of their production is in the U.S. (though not all components),” UBS analysts said in a research note.
General Motors
General Motors, one of the so-called Big Three automakers, along with Stellantis and Ford, is widely expected to be the most exposed to the forthcoming auto tariffs. Headquartered in Detroit, the U.S. car company makes just 45% of vehicles it sells to U.S. customers domestically, leaving 55% of its lineup exposed to tariffs, according to Cox Automotive.
GM, which makes Chevrolet, Buick, GMC, and Cadillac vehicles, is heavily invested in Mexico and Canada, where it build heavy-duty vehicles, according to Cornell’s Wheaton.
Stellantis
Stellantis, whose brands include Jeep, Chrysler, Dodge and Ram, among others, is similarly susceptible to rising costs from the tariffs, as it makes between 73%-75% of vehicles for sale in the U.S. stateside, according to Cox Automotive.
That means, a $80,000 RAM truck from Stellantis could cost $100,000 once it reaches the U.S., under the new policy.
“The impact is quite large,” Wheaton said.
Ford
Ford is among the car companies better positioned to weather the tariffs, according to Cox Automotive analyst Erin Keating, as 80% of its vehicles are manufactured in the U.S. and therefore would not be subject to the 25% tariff on passenger cars. However, any imported parts used in Ford’s U.S.-manufactured vehicles could be tariffed at 25%.
Ford vehicles made in the U.S. include the F-150 pickup truck lineup. However, its smaller vehicles, including the Maverick pickup truck and Bronco Sport SUV are made in Mexico and “will take a hit,” said Wheaton.
Toyota and Honda
Japanese automakers Toyota and Honda export a large number of vehicles and auto parts from Japan to the U.S., which represents a sizable market for the companies. Both also operate big plants in Canada, Wheaten noted, leaving them particularly vulnerable to added costs from new tariffs.
The same goes for South Korean automakers Hyundai and Kia.
BMW and Volkswagen
German automakers, including BMW and Volkswagen, which makes Audi vehicles, both operate big plants in Mexico.
The May 3 auto-parts tariff will likely apply to engines and transmission systems, and hit the company “heavily,” according to Wheaton.
BMW, for instance, which makes a lot of engines in Germany, which are then shipped to South Carolina, where some of the automakers SUVs are manufactured, could be hit “heavily,” by the auto-parts tariffs, according to Wheaton.
Additionally, Mercedes operates similarly, sending engines and transmission from Germany to a plant in Alabama, where the company manufactures SUVs. The 25% auto tariffs would also likely apply to fully assembled Mercedes vehicles shipped to the U.S.
“I don’t think any brands will be spared, because none are 100% in the U.S.,” Wheaton said. “They all have products from Canada, Mexico or elsewhere. And even Tesla, which is the most American, still has non-U.S. content in their vehicles.”
Tariffs could spark affordability issues
Even vehicles whose parts aren’t subject to tariffs and that are assembled in the U.S. could face price hikes, as automakers attempt to spread new costs out across their lineups. While Cox Automotive expects price hikes of between 15%-20% on vehicles that are caught in the tariffs’ crosshairs, those that are exempt could still go up by about 5%, Keating noted.
The auto tariffs could ignite new affordability challenges for consumers by moving lower-cost vehicles closer or in some cases over the $30,000 threshold.
Take, for example, a Hyundai venue, a subcompact crossover SUV, with an average current list price of $24,000. Under Mr. Trump’s auto tariffs, that price could rise to about $28,500, adding more than $4,000 to an affordable design.
“Sub- $30,000 compact SUVS and crossovers that are the most popular are almost all foreign-made, with the exception of one or two,” Keating said. “So they’d all be subjected to the 25% tariffs.”
Megan CerulloMegan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.
