New car prices could surge up to $12,000 after tariffs for the Canadian and Mexican presidents become effective, according to the report.
According to a new survey by Anderson Economic Group, an automotive research and consulting firm, the president's 25% tariff on neighbours sends the cost to build a crossover utility vehicle of at least $4,000.
Research shows that the rise in electric vehicles could triple, potentially leading to costs being passed on to consumers. Previously reported by Bloomberg.
“This kind of cost increase will be directly — and I'm almost immediately expected — a decline in sales of models that have the biggest trade impact,” Patrick Anderson, chief executive of the consulting company, told Bloomberg.
Due to inflation during the pandemic era, vehicles are already extremely high prices, bringing on average close to $50,000 for new cars.
The average trading price last month was $49,740. It was just $200 at its peak in December 2022. Kelly Blue Book Report.
After a month's suspension, Trump's heavy duty is expected to take effect Tuesday.
Experts have warned that taxes could exacerbate price increases across the automotive industry, causing carmakers to halt production of several popular models, including the Chevrolet Silverado Pickup and the Ford Bronco Sport SUV.
The planned tariffs have put automotive executives in panic mode, and Ford CEO Jim Farley warned last month that “pushing holes in the US industry we've never seen before.”
Top Brass from General Motors, Ford and Stellantis, which own brands such as Jeep, Dodge and Ram, met with the Commerce Department via Zoom last week to share their concerns.
Vehicle executives reportedly asked the White House to focus only on imported vehicles that do not contain US parts, as many US-made vehicles contain parts from other countries.
Tesla – owned by Trump's allies and doge leader Elon Musk – produces all US cars sold in domestic soil. However, it still contains about 20% of the parts coming from Mexico, according to the National Highway Traffic Safety Administration.
As consumers move away from potentially record-breaking prices, car sales could decline under tariffs.
According to Dan Hearsch, leader of the Americas Automotive unit at consulting firm Alixpartners, automakers will feel even more painful as they are forced to end production of some vehicles.
He predicted that U.S. car sales could fall by as much as half a million cars as they would suspend production of several vehicles coming from facilities in Canada and Mexico.
“Some vehicles that cannot be produced in the US will probably not be made for a while,” Hearsch told Bloomberg.
Ford's popular Maverick pickup truck, Bronco Sports SUV, and Electric Mustang Mach-E are made in Mexico. GM produces Chevrolet Silverado pickups in Mexico, Canada and the United States, while Stellantis manufactures lamb pickups in Mexico and the United States.
Automakers will try to move as much capacity as possible to the US, but with quick turnarounds they could face challenges replacing complex North American supply chain steps.
“You can see some models and trim types disappear,” Anderson told Bloomberg.
Honda reportedly abolished plans to manufacture the latest civic models in Mexico and pivot to Indiana facilities, according to a Reuters report on Monday.
Stellantis has already overturned plans to close the Illinois factory in January after Chairman John Elkann promised to meet with Trump and boost American manufacturing jobs.
Meanwhile, Volkswagen is reportedly weighing US production sites for Audi and Porsche brands to avoid the proposed tax, according to a German news outlet.
Automakers are also rushing to move materials across the border to the US ahead of tariffs.
“Everyone is definitely spinning,” Hirsch said.
Commerce Howard Lutnick said on Sunday that planned tariffs will move forward on Tuesday.
It is unclear how long the tax will remain, as the White House says it intends to pressure the country to stop the flow of illegal fentanyl smuggling.
