President Trump announced on Sunday that he will impose a 25% tariff on all steel and aluminum entering the U.S. The White House will announce details of the move later today.
It has automakers and the parts industry that supplies them on edge. Industry publication Automotive News reports, “Such a move would have a significant cost impact on automakers and their suppliers.”
Related: Trump Tariffs Have Some in Auto Industry Fearing Collapse
Trump made a similar move before, but with important exceptions that kept the tariffs’ impact on new car prices minor. CNBC explains, “Trump, during his first term, imposed tariffs of 25% on steel and 10% on aluminum, but later granted several trading partners duty-free exemptions, including Canada, Mexico, and Brazil.”
Exemptions for Canada and Mexico minimized the tariffs’ impact on the automotive industry. Car production is integrated through much of North America, with many vehicles and parts passing back and forth over America’s northern and southern borders more than once during construction.
The industry is already tense, awaiting Trump’s decision on threatened blanket tariffs against Mexico and Canada. Trump had announced those with a Feb. 1 start date, then delayed the move until March 1.
Analysts believe the blanket tariff could raise the price of the average car by up to $3,000. Steel and aluminum tariffs would likely have a slightly lower impact. But, with both metals common in every new car, they would likely mean higher prices.