Anderson Economic Group, an economic consulting firm based in Michigan, is raising concerns that a series of new tariffs proposed by President Donald Trump may significantly increase the price of new vehicles in the United States.
Per a report from Detroit Free Press, the firm’s CEO, Patrick Anderson, spoke on the issue during an Automotive Press Association webcast last week, stated that the tariffs would impose substantial costs on auto parts and vehicles with foreign content, potentially leading to an increase of up to $10,000 per vehicle.
The tariffs would target vehicles and auto parts produced in Canada, Mexico, and China, with a proposed 25-percent tax on goods from Canada and Mexico, and a proposed 10-percent tax on imports from China. These added costs would have a major impact on automakers that rely on international supply chains. Anderson’s analysis suggests that full-size SUVs built using a “substantial” number of components from Mexico could see some of the highest price increases.
Automakers may struggle to absorb these additional costs while maintaining profitability. Ford CEO Jim Farley has voiced strong opposition, warning that the tariffs could “blow a hole” in the U.S. auto industry by dramatically increasing production expenses. President Trump has also moved to impose a 25-percent tariff on imported steel and aluminum.
While the proposed automotive tariffs have not yet been finalized, Trump has stated they could take effect as soon as April 2nd. If implemented long-term, these tariffs could force major shifts in manufacturing strategies. General Motors, for instance, may have to reconsider plant locations, potentially leading to job losses and supply chain disruptions. Despite this, GM CFO Paul Jacobson remains upbeat over the company’s ability to navigate the looming tariffs, stating last week that The General had “a good playbook” in place if the proposed tariffs do end up going into effect.
President Trump has threatened to impose hefty tariffs on Mexican and Canadian goods on several occasions, including on the campaign trail leading up to the 2024 election and immediately after taking office earlier this year. However, the tariffs have been subsequently delayed multiple times.
Possible tariffs aren’t the only issue facing automakers as a plodding adoption rate for electric vehicles fails to keep pace with projections, partly due to high upfront costs and limited charging infrastructure. Anderson projects a 21-percent EV adoption rate by 2030, which is much lower than GM’s projected 50-percent rate by the same year.
