President Trump announced on Wednesday 25% tariff on vehicles and auto parts New obligations imported into the US could lead to sticker shocks on a wide range of vehicles aimed at American consumers, including those manufactured in the US, analysts say.
Few vehicle manufacturers are spared by fresh taxation aimed at revitalizing domestic automobile manufacturing. Industry analysts say the tax will certainly raise U.S. car prices and drive some car buyers out of the market.
Some manufacturers could move their share of production to the US, but “at the expense of reduced competition, higher prices and significantly lower production of major US trading partners,” Oxford economics analyst Abbey Stamp said in a research note.
The automotive supply chain is extremely complex and intertwined with the Mexican and Canadian economies, from which the American brand sources finished vehicles and parts. According to the executive order, Trump’s tariffs on passenger cars imported to the US and passenger cars and lightweight trucks imported to the US will be in effect “until May 3rd” on automobile parts shipped from abroad.
Analysts say all carmakers will be affected by the new tariffs, but some will be hit far more hard than others.
Tesla
Elon Musk, CEO of Tesla, a close ally to Trump, posted on X on Wednesday that the new tariffs would affect the company’s American-made electric vehicles.
“It is important to note that Tesla is not unharmed here. The impact of tariffs on Tesla remains important,” Musk wrote Wednesday. “To be clear, this affects the price of parts for Tesla cars from other countries. The impact of costs is not trivial,” he wrote in a later post.
That said, Tesla is expected to be one of the least impacted automakers from tariffs, given that its vehicle is made in the US and most of its parts are supplied domestically. However, EV brands rely on China, so some batteries are dependent on China. “That’s why tariffs have an impact,” Art Wheaton, a transportation industry expert and director of labor research at Cornell’s Industrial and Labor Relations School, told CBS Moneywatch.
According to UBS, Tesla’s rival Libian could be spared for similar reasons.
“TSLA and RIVN believe that they will be better because 100% of their production is in the US (though not all components),” UBS analysts said in a research note.
General Motors
General Motors, one of the so-called three big car makers, is widely expected to be the most exposed to future car rates, along with Stellantis and Ford. According to Cox Automotive, the Detroit-based US automotive company sells just 45% of the vehicles it sells to U.S. customers to U.S. customers, leaving 55% of its lineup exposed to customs duties.
According to Cornell’s Wheaton, GM, which manufactures Chevrolet, Buick, GMC and Cadillac vehicles, has invested heavily in Mexico and Canada, building heavy-duty vehicles.
Stellantis
According to Cox Automotive, brands like Jeep, Chrysler, Dodge and Ram are similarly affected by increased costs from tariffs, as 73% to 75% of vehicles sold in US states, among other things.
This means that a $80,000 RAM truck from Stellantis could cost $100,000 when it reaches the US under the new policy.
“The impact is huge,” Wheaton said.
Ford
According to Cox Automotive analyst Erin Keating, Ford is one of the best auto companies in a position to survive tariffs. Therefore, since 80% of vehicles are manufactured in the US, they are not subject to 25% customs duties on passenger cars. However, imported parts used in Ford’s US-manufactured vehicles can be subject to customs duties at 25%.
Ford vehicles made in the US include a lineup of F-150 pickup trucks. Some of the smaller vehicles, including Maverick pickups and Bronco Sports SUVs, are made in Mexico and “it’s a hit,” Wheaton said.
Toyota and Honda
Japanese automakers Toyota and Honda export a large number of vehicles and auto parts from Japan to the US. This represents a considerable market for businesses. Both operate large plants in Canada, Wieten points out, and they are particularly vulnerable to additional costs from new tariffs.
The same can be said about Korean car manufacturers Hyundai and Kia.
BMW and Volkswagen
German car manufacturers, including BMW and Volkswagen, which make Audi cars, both operate large plants in Mexico.
According to Wheaton, the May 3rd auto parts tariff would likely apply to engines and transmission systems, potentially “heavy” to strike the company.
For example, BMW manufactures many engines in Germany, and it is shipped to South Carolina, where automakers make SUVs. According to Wheaton, the company could be hit “heavy” by tariffs on auto parts.
Mercedes-Benz is similarly operated, sending the engine and transmission from Germany to a factory in Alabama. 25% car rates could also apply to fully assembled Mercedes vehicles shipped to the US
“I don’t think the brand will survive because it’s not 100% in the US,” Wheaton said. “They all have products from Canada, Mexico or elsewhere, and even Tesla, the most American, still have non-US content in their vehicles.”
Customs duties can cause affordability issues
As automakers try to spread new costs across their lineup, even vehicles with parts not subject to tariffs and assembled in the US could face price increases. Cox Automotive expects a price increase for vehicles caught in the tariff crosshairs to rise by 15% to 20%, but those exempted could still rise around 5%, Keating said.
Automotive fares can either move low-cost vehicles closer or, in some cases, above the $30,000 threshold, sparking new affordable challenges for consumers.
For example, at the Hyundai venue, a subcompact crossover SUV, the average current list price is $24,000. Under Trump’s auto rates, its price could rise to around $28,500, adding more than $4,000 to the affordable design.
“The most popular $30,000 compact SUVs and crossovers are almost all foreign-made except for one or two,” Keating said. “So they’re all going to be exposed to 25% tariffs.”
