Canadian Prime Minister Justin Trudeau said the new 25% tariffs imposed by the Trump administration on his country are “very dumb.” (Credit: Reuters)
President Donald Trump’s new tariffs on Mexico and Canada could cause car prices to surge up to $12,000, a new analysis finds.
The Anderson Economic Group analyzed the impact of Trump’s 25% tariffs on products from Canada and Mexico and found that the tariffs, which are taxes on imports, would cause.
For a crossover utility vehicle, manufacturing costs would rise by at least $4,000 due to the tariffs, while for a large SUV with a significant amount of content from Mexico it would rise by roughly $9,000 — with pickup trucks seeing a similar increase of $8,000.
Electric vehicles (EVs) would see the biggest cost increases from the tariffs, as costs could rise upwards of $12,000, the analysis found.
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President Donald Trump’s 25% tariffs on imports from Canada and Mexico could increase car prices by thousands of dollars per vehicle, an analysis found. (Anna Moneymaker/Getty Images / Getty Images)
The Anderson Economic Group also considered the impact of potential additional steel and aluminum tariffs, which it found would add $250 to $800 for gas-powered vehicles made in North America and up to $2,500 for EVs, presuming an exclusion applies for country tariffs.
Vehicles made in Europe and Asia would see an additional $800 to $1,700 in cost per vehicle without a tariff exclusion.
Retaliatory tariffs that Canada and Mexico may impose against U.S. goods over Trump’s 25% tariffs could drive those prices higher as levies are imposed or increased, spurring retaliation by the Trump administration.
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Prime Minister of Canada Justin Trudeau slammed the Trump administration’s new tariffs on Tuesday, March 4. (Thierry Monasse/Getty Images / Getty Images)
Patrick Anderson, CEO of the Anderson Economic Group, told Bloomberg, “That kind of cost increase will lead directly — and I expect almost immediately — to a decline in sales of the models that have the biggest trade impacts.”
The North American auto industry is highly interconnected between facilities in the U.S., Canada and Mexico, as automakers have built supply chains to take advantage of efficiencies created by trade agreements between the three countries.
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Mexican President Claudia Sheinbaum holds a press conference to announce a response to U.S. tariffs at the National Palace in Mexico City on March 4. (Raquel Cunha/Reuters / Reuters)
Auto parts may be shipped from the U.S. to Canada, then to Mexico and back to the U.S. in the course of the manufacturing process. Depending on the part and the company, it could cross the U.S. even more frequently.
Each time those auto parts cross the U.S. border, the 25% tariff can be assessed if there isn’t an exception granted, which creates a compounding effect for tariff costs. That, in turn, drives the prices paid by consumers for the finished vehicle or part higher.
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A report by the Cato Institute noted that for some auto parts like an engine or transmission, that part could cross America’s borders with Canada and Mexico upwards of seven or eight times before they end up in a finished vehicle.
