“Understanding the New Auto Tariffs: What They Mean for America and You” | CNN Business

President Trump’s recent tariffs on imported cars are set to shake up the automotive landscape in the U.S. Starting at 12:01 am ET on Thursday, a 25% tax will now apply to nearly half of the 16 million new cars purchased in America each year. This is about to affect not just car buyers but also the industry itself.

Imported cars make up a significant part of the market, with Mexico supplying 2.5 million vehicles and Canada adding another 1.1 million to U.S. dealerships. Cars are heavily integrated within a North American supply chain, and the new tariffs will raise costs for automakers and ultimately consumers. In fact, for example, a car valued at $40,000 would incur an additional $10,000 in taxes due to these tariffs.

Experts warn that this move could lead to higher consumer prices across the board. The average cost of a new car in America is already near $50,000, and these tariffs will likely push prices even higher, making it more challenging for consumers to afford the vehicles they want and need. For perspective, Bank of America predicts that the tariffs could increase the price of American-made cars by about $4,000, while other analysts estimate costs could rise by over $12,000 for specific models. Automaker CEOs like Ford’s Jim Farley have expressed concern about these tariffs potentially creating a significant disruption in the U.S. auto industry.

This isn’t the first time the automotive market has faced dramatic changes that affect pricing and demand. During the pandemic in 2021, car production was hit hard due to supply chain issues, particularly a shortage of computer chips. Prices for new vehicles skyrocketed during that time, with an average increase of 17% for new vehicles within the year. As history suggests, Americans have shown a keen interest in purchasing vehicles before drastic price increases take effect. Many buyers rushed to dealerships as the tariffs were about to take effect, indicating an uptick in sales specifically for imported cars.

Automotive workers’ jobs are also on the line. With approximately 1 million people employed in car assembly and parts production in the U.S., the threat of job losses looms large, particularly if the tariffs lead to decreased sales. The administration claims that the tariffs aim to encourage automakers to produce more in the U.S., but experts believe layoffs could occur before new jobs are created.

The protests against these tariffs come from various fronts. Many consumers voiced their frustrations on social media, lamenting the higher costs and limited choices due to the tariffs. Comments range from disbelief over potential price hikes to serious concerns about their ability to buy a car they need.

Despite the anticipated fallout, the United Auto Workers union supports the tariffs, believing they may bring back jobs to working-class communities. However, shifting production to the U.S. won’t be quick or easy, given the complexities of the auto manufacturing process. Industry executives highlight that bringing jobs back would require significant investment in new facilities or upgrades to existing ones, a process that could take years.

In summary, Trump’s auto tariffs pose a significant risk to both buyers and the automotive industry at large. As prices are expected to rise and jobs hang in the balance, the next few months will be pivotal for understanding the broader implications these tariffs will have on America’s car culture and economy.

For more detailed statistics on the automotive industry, you can visit S&P Global Mobility’s latest report here.

Check out this related article: How Americans Feel About Trump’s Tariffs: A Spectrum of Reactions from Concern to Excitement