Economists warn that new auto tariffs could lead to major price hikes for American consumers. A proclamation signed by President Donald Trump on March 26 imposes a 25% duty on imported vehicles starting April 3, with tariffs on auto parts following on May 3. Analysts say this could make some low-cost imports too expensive to sell in the United States.
“Americans will keep their cars longer. They’ll have to,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. “They won’t be able to afford them. They’ll also have a lot less choice.”
The tariffs may also drive up prices for American-made cars due to higher part costs. However, the White House says parts that qualify under U.S., Mexico and Canada trade rules will get a temporary exemption while officials establish a tariff system.
The Anderson Economic Group estimates U.S. vehicle production costs could increase by up to $12,000. While consumers may pay more, some economists argue tariffs will help domestic manufacturers.
“It may fall in the first instance on the American manufacturer, who buys the input, who may then pass it on to the consumer, or it is passed through directly through the retail chain to the American consumer,” said Lovely.
The United Auto Workers union supports the plan, citing potential benefits for American jobs. However, concerns remain about the broader economic impact on businesses and buyers.
