Auto tariffs take effect, putting pressure on new car prices
That provision will reduce the impact on vehicles including the Chevrolet Equinox electric vehicle, which is assembled in Mexico but includes a battery pack and other components made in the United States. General Motors will pay a tariff only on the portion of the car made abroad.
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At the same time, the duty on parts will raise the cost of cars made in Michigan, Tennessee, Ohio or other states. That is because most cars rolling out of U.S. factories contain components made abroad, often amounting to more than half the cost of the vehicle.
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About 90% of the value of some Mercedes-Benz cars made in Alabama, for example, is in engines and transmissions that are imported from Europe, according to data compiled by the National Highway Traffic Safety Administration.
The impact of the tariffs on individual vehicles will vary widely. Cars including the Tesla Model Y, made in Texas and California, or Honda Passport, made in Alabama, have high percentages of U.S.-made parts and will pay lower tariffs.
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Tariffs will be highest on cars manufactured abroad, such as the Toyota Prius made in Japan or Porsche sports cars made in Germany.
Even people who don't buy new cars will be hit by the tariffs because they will pay more for parts like tires, brake pads and oil filters.
Michael Holmes, co-CEO of Virginia Tire and Auto, a chain of auto repair and maintenance shops, said he and his suppliers would initially try to absorb most of the increased cost.
'That's not sustainable,' Holmes said. 'It's magical thinking to think businesses won't pass this on.'
The auto tariffs could also push up prices for used cars over time, analysts said, by increasing demand for those vehicles as new ones become unaffordable for many buyers. Insurance premiums may also rise because repairs will cost more.
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