Trump's Auto Tariffs: Impact on Car Prices and Global Trade

Since President Trump took office, we’ve seen a number of tariffs set in place. So far, we’ve witnessed 25% duties on aluminum and steel imports. 

Then, the administration imposed two additional sets of 10% tariffs on goods from China, first in February and again in March. Now, we’re witnessing imported car tariffs. 

While other tariffs remain on hold, let’s take a look at the Trump auto tariffs that were put in place earlier this week to see what impact they might have on U.S. trade policy. 

Trump Slaps Tariffs on Imported Autos, Prompting Threats of Retaliation

Unfortunately, these auto industry tariffs are coming with retaliatory threats from some of our most important allies like Canada and Europe. With a 25% tariff on cars and trucks not made in the U.S., you can see why other countries are fearing a major loss of revenue. 

The trouble is this runs the risk of escalating a trade war with our top trading partners. That said, the other side of the coin is the notion that President Trump is trying to “put America first.” He’s aiming to boost our economy and pour money back into stateside auto makers. 

His declaration was a firm line in the sand: “If you build your car in the U.S., there’s no tariff.” These new duties are set to take effect on April 3rd. 

$100 Billion in Revenue

In a more detailed briefing paper, the Trump administration said this move could raise $100 billion in revenue for the American economy – their ultimate goal.

The 25% tariff will be applied to all passenger vehicles and light trucks, as well as key components (i.e., engines, transmissions, powertrain parts, etc.). There are also processes in place to expand tariffs on additional parts, if necessary. 

The trouble here, again, is that many vehicles are assembled elsewhere, including Canada and Mexico, before they’re shipped to the U.S. for sale. So, with these tariffs in place, consumers might end up paying more for a new car because the cost to produce them came with these hefty taxes. 

Backlash from Abroad

The European Commission President, Ursula von der Leyen, said that the EU will continue to “seek negotiated solutions” with the U.S. Meanwhile, Canadian Prime Minister, Mark Carney, went even further, calling these tariffs a direct attack on his nation. 

While the Trump administration maintains that this is all in an effort to put America first, the trouble is, the American consumers may take the hit on these taxes. Still, Trump maintains that they’re absorbed by the country exporting the goods, not the U.S. consumer. 

Let’s Wait and See

There’s not much we can do but wait and see, is there? Who will consume the cost of the Trump auto tariffs – the manufacturer or the consumer? With so many new tariffs in place, it’s too soon to tell, especially when dealing with the finer details like aluminum, steel, and key auto parts. 

In these highly contentious times, we’re closely monitoring the news for and with you. Keep coming back for unbiased summaries of the state of the nation as we fight to stand our ground and protect our rights, no matter who or what has the American nation in their crosshairs.