Former U.S. President Donald Trump’s proposed $30 billion in auto tariffs could lead to car buyers paying up to $2,000 more per vehicle, according to a new joint analysis by AlixPartners and Bloomberg Intelligence. The new tariff plan, if implemented, could reshape the auto industry, push up retail prices, and hurt U.S. consumers just as car prices were beginning to stabilize post-pandemic.
Trump, who is seeking a return to the White House in 2025, has long supported aggressive trade policies, especially targeting countries like China and Mexico. His latest proposal is focused on levying a 10% universal tariff on all imported goods, with higher duties on auto imports, potentially affecting vehicles, parts, and components across global supply chains.
According to Bloomberg and consulting firm AlixPartners, the new tariff plan could increase the cost of vehicles sold in the United States by $2,000 on average, depending on the make and model. Some imported vehicles could even see price hikes of more than $6,000.
AlixPartners, a well-known global consulting firm specializing in the automotive sector, noted that more than 50% of U.S. auto sales involve imported vehicles or parts, making them vulnerable to price hikes under the proposed tariffs. Even U.S.-assembled cars would be impacted due to reliance on foreign components.
Read the full analysis by AlixPartners here
Trump has said that tariffs are a necessary tool to “bring manufacturing back to America.” His campaign has often blamed overseas competition for harming U.S. jobs, especially in the auto and steel industries. The former president has promised that if elected, he will make the U.S. “economically independent” by reducing reliance on foreign products.
While the Trump campaign argues that tariffs will boost domestic manufacturing, critics say they function as a hidden tax on consumers. The added costs often get passed down the supply chain—ending up in higher prices for buyers.
Explore Trump’s trade policy details on Bloomberg
Luxury brands like BMW, Mercedes-Benz, Toyota, and Honda, which rely heavily on international supply chains, could be the first to feel the impact. But even American brands like Ford and General Motors would be hit because many of their parts come from Mexico, China, or Canada.
According to AlixPartners, cars made in Mexico and Canada account for over 25% of U.S. auto imports. If Trump’s plan includes those trading partners, the tariffs would have a wide-reaching effect.
Auto industry leaders and economic analysts are warning that Trump’s tariff proposal could do more harm than good. Dan Hearsch, Managing Director at AlixPartners, said that “the cost burden will almost certainly fall on the consumer,” and that automakers may cut investments or reduce production in response to the tariff uncertainty.
Kristin Dziczek, automotive policy expert at the Chicago Federal Reserve, added that tariffs are a short-term solution that create long-term disruptions in supply chains. “The ripple effect could slow down car sales, reduce innovation, and make American products less competitive globally.”
The proposed tariffs could also fuel inflation, just as the Federal Reserve has been working to cool down the economy. A $2,000 increase in car prices would likely hit middle-class families the hardest, especially those relying on financing or leasing.
According to the Bloomberg report, the average car payment in the U.S. already sits above $725 per month. An additional $2,000 could push many buyers out of the new car market altogether, boosting demand for used cars and raising their prices as well.
Check out the latest U.S. car payment trends on Bloomberg
The Biden administration has sharply criticized Trump’s tariff policy, calling it “reckless and inflationary.” President Biden’s economic advisors argue that imposing blanket tariffs would strain diplomatic relationships and violate trade agreements, especially with U.S.-Mexico-Canada Agreement (USMCA) partners.
On the other hand, some Republican lawmakers and industrial lobbying groups support the move, saying it could finally level the playing field for American workers and encourage reshoring of manufacturing.
The tariff debate is likely to be a key campaign issue in the 2024 presidential election, especially in swing states like Michigan and Ohio, where the auto industry plays a major economic role.
If you’re planning to buy a car in the next year, experts suggest that now might be the right time. With the possibility of new tariffs in 2025, prices could rise quickly if Trump’s proposal is implemented.
Buyers should watch for:
Financial advisors also recommend looking into lease options or certified pre-owned vehicles as alternatives to buying new, especially if tariffs push prices out of reach.
Trump’s $30 billion auto tariff proposal could have a massive impact on the car market, driving up prices, slowing down sales, and disrupting global supply chains. While the political debate heats up, everyday consumers may soon find themselves paying more at the dealership.
Whether you support the plan or not, there’s no denying that the proposed tariffs could change how Americans buy and sell cars for years to come.
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