President Donald Trump on Wednesday announced a 25% tariff on auto imports, which will substantially raise the price of imported vehicles. In addition, Trump’s new 25% tariffs on imported parts will increase the cost of vehicles manufactured in the United States.
National Taxpayers Union Free Trade Initiative Director Bryan Riley estimated, based on 2024 import data, that a 25% tariff would cost an average of $6,532 for vehicles imported from the European Union, Japan, and Korea.
The impact on Canadian and Mexican imports is more difficult to calculate, as the Secretary of Commerce may exempt certain imports under the United States-Mexico-Canada Agreement from the new tariffs. Assuming 38% of the value of vehicles imported from Mexico consist of U.S. content and are granted zero-tariff treatment, a 25% tariff on the remaining value would cost an average of $4,451 per vehicle imported from Mexico.
U.S.-Canada supply chains are so integrated that the government simply lists combined “U.S./Canadian” content for auto labeling purposes, which makes the price impact even more difficult to determine.
“Instead of imposing costly tariffs on cars and trucks, we urge President Trump to focus on reducing taxes and regulations that discourage production in the United States.
“President Trump’s plans to cut taxes, lower energy costs, and reduce unneeded regulations will help taxpayers tremendously. However, these tariffs undermine his ‘America First’ agenda by raising costs for American consumers and businesses at a time when they are still struggling from Joe Biden’s failed policies,” Riley said.
Riley’s estimates are consistent with the U.S. International Trade Commission’s finding that tariffs imposed under sections 232 and 301 from 2018 to 2021 resulted in a nearly one-to-one increase in prices of U.S. imports.