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3mo ago

Trump’s 25% Auto Tariffs Raise U.S. Car Prices by Nearly $2,000 as Industry Adjusts

Analysts warn that reduced EV incentives will curb electric vehicle adoption in the United States.

LOS ANGELES, CALIFORNIA – JANUARY 31: Vehicles sit for sale a used car lot on January 31, 2023 in Los Angeles, California. Prices and sales of used vehicles are falling from pandemic highs amid rising interest rates, increased production of new automobiles and concerns of a recession. (Photo by Mario Tama/Getty Images)
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Overview

  • Consultant AlixPartners projects that automakers will pass on 80% of tariff costs, adding about $1,760 to the sticker price of each imported vehicle.
  • General Motors and Ford anticipate $5 billion and $2.5 billion in tariff-related expenses this year and plan to offset impacts through price adjustments.
  • Tariff costs are expected to decline by 40% to $30 billion in 2026 as rates fall on vehicles and parts compliant with USMCA trade rules.
  • Higher prices are forecast to reduce U.S. auto sales by roughly 1 million vehicles over three years before rebounding to 17 million units by 2030.
  • Cuts to EV tax credits are set to halve battery‐electric market share to 17% of U.S. sales by 2030, bolstering demand for gasoline and hybrid models.