A trade group representing nearly all major automakers has warned that new 25% tariffs on imports from Canada and Mexico imposed by US President Donald Trump will lead to a sharp rise in car prices.
Points of attention
- New 25% tariffs on car imports from Canada and Mexico imposed by US President Donald Trump are expected to lead to a significant rise in car prices in the US, potentially increasing them by up to 25%.
- Major automakers, including General Motors, Ford, Toyota, Volkswagen, Hyundai, and Stellantis, warn that these tariffs will disrupt the integrated supply chain in North America that has been in place for over 25 years.
- The automotive industry's highly integrated nature in North America means that the tariffs will impact American automakers like Stellantis' flagship brands.
US automakers sound the alarm over Trump's new tariffs
These tariffs on imports from Canada and Mexico will affect all automakers. Many expect prices for some car models to increase by as much as 25% and the negative impact on car prices and affordability will be felt almost immediately, said John Bozzella, president of the Automotive Innovation Alliance, which represents all major U.S. automakers except Tesla. The Alliance's members include General Motors, Ford, Toyota, Volkswagen, Hyundai and Stellantis.
Automakers warn that tariffs will disrupt an integrated supply chain across North America that has existed for more than 25 years.
Some auto parts can cross the border six or more times before finally making it to the assembly line. Bozzella added that the dilemma is that “you just can’t move automotive manufacturing and the supply chain overnight.”
On March 4, Stellantis told dealers that the automaker continues to work with the Trump administration on tariffs that will create a “financial burden” that will impact customers.
Because the industry is highly integrated in North America, these tariffs will put Stellantis' flagship brands—Chrysler, Dodge, Jeep and Ram—at a competitive disadvantage compared to Korean, Japanese and European importers.
Last week, many automakers met with Commerce Secretary Howard Lutnick to urge the administration not to pursue broad tariff increases.
Also last month, Ford CEO Jim Farley warned that 25% tariffs on imports from Mexico and Canada would "punch a hole" in the American auto industry.
The American International Automobile Dealers Association noted that dealers are already facing rising prices for cars and parts, as well as high interest rates.
