President Trump said Monday evening that he could enact new tariffs of up to 25% on all trade with Canada and Mexico next month.
The proposed tariffs could heavily impact the prices of new cars. The tariffs, Trump said, would be put in place until those countries restrict immigration to the U.S.
“We are thinking in terms of 25% on Mexico and Canada because they are allowing vast numbers of people,” Trump said. “I think we will do it February 1.”
Significant Impact on Car Prices
“Trump’s plans for tariffs on two nations vital for U.S. energy and auto imports threatens to set off a trade war among the signatories of the U.S.-Mexico-Canada Agreement, the successor to NAFTA negotiated at Trump’s insistence during his first term,” Reuters explains.
Automakers have signaled that the tariffs would radically impact car prices.
No car is built entirely in the U.S. of entirely American parts. Automakers move parts so freely between the U.S. and Canada that even federal law requires them to report only the percentage of U.S. and Canadian parts in cars.
A recent study found that Tesla makes the cars with the highest percentage of American and Canadian parts. However, even the “most American” car in the study used some Chinese parts, and Tesla didn’t break out the percentage of parts imported from Canada.
The AP explains, “Trump pledged in his inaugural address that tariffs would be coming and said foreign countries would be paying the trade penalties, even though those taxes are currently paid by domestic importers and often passed along to consumers.”
U.S.-based analysts from Wolfe Research found last month that such tariffs could increase the price of the average car by $3,000. Analysts from AutoForecast Solutions have said the move would raise some pickup truck prices by up to $10,000.
Reuters adds, “The additional levies would hit about $97 billion worth of auto parts and 4 million finished vehicles that come into the U.S. from those countries.”
