Trump's auto tariffs are expected to bump up vehicle prices — and soon

E&E News

2 days ago

Auto experts project that President Donald Trump's tariffs are likely to raise the cost of a car by thousands of dollars as soon as this fall, undercutting cost savings he's promised from getting rid of what he has called 'industry-killing' environmental regulations.
Trump's promise includes removing financial penalties for automakers that don't meet fuel efficiency standards as a way to provide economic relief to Americans and carmakers. But auto industry experts and analysts said they expect auto prices to rise — and soon — due to ongoing tariffs on automobiles, auto parts and other key components like steel.
'Certainly, if rolling back [Corporate Average Fuel Economy] standards reduces vehicle prices, any sort of tariff will act to offset,' said Chris Douglas, a University of Michigan-Flint professor of economics. 'A tariff is just a tax, and any tax is just passed onto consumers in some form.'
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Currently, automobiles and auto parts imported into the U.S. are subject to some 25 percent in tariffs, with some exceptions for companies with a large portion of their operations in the United States. (Some countries — like Japan and the United Kingdom — have negotiated lower auto tariffs.) Trump's tariffs on steel and aluminum imports — now at 50 percent for most of the world's countries — are also expected to make auto manufacturing more costly in the U.S. and around the world.