Americans may pay $2,000 more for each new car, thanks to Trump

Time of India

6 hours ago

Trump's plan of 'Making America Great Again' is likely to backfire and punish its own people and industry. His $30 billion worth auto tariffs are set to have a direct impact on car buyers, or plainly put, the Americans themselves will be bearing the brunt of it.
As July approaches and with the tariffs taking effect, car prices are expected to shoot up by almost $2,000 per vehicle, driving up already high US auto prices, Bloomberg reported citing consultant AlixPartners.
The firm estimates that automakers will pass along about 80 per cent of the tariff costs directly to customers, who will be paying around $1,760 more per car on average. As a result, US auto sales could drop by 1 million vehicles over the next three years. However, the firm expects a rebound to 17 million annual sales by 2030, a million more than last year, as tariff effects begin to ease.
'These tariffs bring a big wall of cost,' said Mark Wakefield, global auto market lead at AlixPartners, during an online briefing. 'We see consumers taking the majority of the hit.'
Major US carmakers have already flagged the impact.
General Motors
expects a $5 billion hit from the tariffs this year, while Ford estimates $2.5 billion. Both companies say they plan to manage the blow, partly by adjusting prices.
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AlixPartners' forecast is less severe than others because it assumes tariffs will reduce over time as trade talks progress. The current 25 per cent tariff on imported cars may fall to 7.5 per cent on fully assembled vehicles and 5 per cent on parts, with even lower rates for vehicles that qualify under the US-Mexico-Canada Agreement (USMCA).
'This tariff wall is not likely to last forever,' Wakefield added.
EV incentive Cuts may stall American auto innovation
While tariffs may ease in the long term, a more lasting concern for the auto industry is the Trump administration's move to cut electric vehicle (EV) incentives.
AlixPartners warned that scaling back support measures, such as the $7,500 consumer tax credit for EVs, will push buyers toward cheaper, gasoline-fueled vehicles.
'Car buyers will follow their pocketbook,' Wakefield said.
As a result, the firm has sharply cut its forecast for US EV adoption. It now expects EVs to make up only 17 per cent of total vehicle sales in 2030, down significantly from an earlier projection of 31 per cent.
Meanwhile, traditional internal combustion engine vehicles are expected to make up 50 per cent of the market, up from 33 per cent. Hybrid models are forecast to grow modestly to 27 per cent, while plug-in hybrids and extended-range EVs are expected to shrink to just 6 per cent, down from 10 per cent.
For consumers, that could mean fewer affordable electric options and a deeper dependence on older, fuel-based technologies, just as the rest of the world moves ahead.
The shift away from EVs could leave American automakers falling behind global competitors, especially as companies in China continue to lead in electric vehicle technology.
'It makes it much more likely that they end up licensing or joint venturing or otherwise using platforms and EV technologies from China,' Wakefield said.
With fewer incentives and higher costs, the US risks becoming an outlier in clean transportation.
'They'll have the world's best V8 engines by 2028,' Wakefield added. 'They'll probably also have the world's only V8 engines by 2028.'