In an interview with NBC News, President Donald Trump dismissed concerns that his new auto tariffs could lead carmakers to increase prices, expressing indifference to that possibility. He mentioned that he would welcome such a development, as it might encourage consumers to purchase more American-made cars. Despite this stance, it is notable that even vehicles assembled in the United States often contain foreign-made parts.
Trump has reiterated that these tariffs are permanent, asserting during the interview that the move is an effort to address what he perceives as longstanding inequities in trade policies. He emphasized fairness and generosity in implementing the tariffs, which are set to impose a 25% duty on foreign-made auto parts. However, under the US-Mexico-Canada Agreement, vehicles and parts imported from these countries will be temporarily exempt from these duties until a formal process is established.
Automakers in both the U.S. and abroad operate with supply chains that closely integrate operations across North America, resulting in vehicles and parts frequently crossing borders between the U.S., Mexico, and Canada during various stages of production. Dan Ives, an analyst at Wedbush Securities, estimated that the tariffs could potentially increase car prices by $5,000 to $10,000, depending on whether a vehicle is a mass-market or premium model. In his research note, Ives noted that these logistical complexities make it challenging to fully grasp the tariffs’ impact at this stage.
The White House argues that these tariffs are intended to bolster the U.S. industrial base. However, Ives expressed doubt that car manufacturing could be entirely relocated back to the U.S., partly because American-made cars often include 40% to 50% components that are imported. He remarked that a fully U.S.-produced car is not currently feasible.
This summary is based on an article originally published on Fortune.com.
