On Wednesday, former U.S. President Donald Trump announced 25% tariffs on all vehicles and auto parts imported into the United States. The new policy is aimed at reviving domestic auto manufacturing, but experts warn it will likely increase car prices across the board—even for vehicles made in the U.S.
With these new tariffs, American car buyers may face much higher prices, especially on cars made using foreign parts or assembled outside the U.S.
Let’s take a closer look at how different car companies will be affected and what this means for regular car buyers.
When Will the Tariffs Start?
- April 3, 2025: 25% tariffs on imported passenger cars and light trucks begin.
- No later than May 3, 2025: 25% tariffs on auto parts from foreign countries come into effect.
These tariffs are expected to disrupt the global car supply chain, especially between the U.S., Mexico, and Canada—where many American brands manufacture vehicles and components.
How Will Car Manufacturers Be Affected?
Tesla
- Most of Tesla’s cars are made in the U.S., so the impact is less compared to others.
- However, some parts like batteries come from China, which means costs will still rise.
- Elon Musk said on X (formerly Twitter) that the tariffs will affect Tesla, especially due to foreign-sourced parts.
Rivian
- Like Tesla, 100% of Rivian’s production is based in the U.S.
- UBS analysts believe Rivian and Tesla will be less affected compared to others.
General Motors (GM)
- Only 45% of GM’s cars sold in the U.S. are made domestically.
- The other 55% are built in Mexico and Canada, which means most of GM’s lineup will face full 25% tariffs.
- GM brands include Chevrolet, Buick, GMC, and Cadillac.
Stellantis
- Stellantis owns Jeep, Dodge, Ram, Chrysler, and more.
- Around 73%-75% of its vehicles sold in the U.S. are made locally, but that still leaves many models exposed.
- Example: A $80,000 RAM truck could cost nearly $100,000 after tariffs.
Ford
- Ford is in a better position, as 80% of its vehicles are made in the U.S.
- Popular models like the F-150 pickup are not affected.
- However, smaller models like the Maverick and Bronco Sport, made in Mexico, will be hit by the tariffs.
Toyota and Honda
- Both companies export many vehicles and parts from Japan to the U.S.
- They also have large factories in Canada, making them more vulnerable to cost increases.
Hyundai and Kia
- These South Korean brands also rely heavily on foreign manufacturing, and so will likely face big cost hikes.
BMW, Volkswagen, Mercedes-Benz
- These German carmakers operate plants in Mexico and Germany.
- For example, BMW sends engines from Germany to its U.S. plant in South Carolina.
- Mercedes-Benz ships parts from Germany to Alabama, where it assembles SUVs.
- All of them will face heavy impacts under the new tariffs.
What Experts Are Saying:
“I don’t think any brands will be spared… even Tesla has parts from outside the U.S.,” said Art Wheaton, a car industry expert from Cornell University.
What This Means for Car Prices in the U.S.
Even if a vehicle is made in the U.S., if it contains imported parts, the price will likely go up. Automakers are expected to spread the added costs across all their models.
Expected Price Increases:
- Cars affected by tariffs could rise by 15% to 20%
- Even tariff-exempt vehicles might see a 5% increase
This means that affordable vehicles may no longer be affordable.
Example:
- A Hyundai Venue currently costs around $24,000
- After tariffs, it could rise to $28,500, adding more than $4,000
“Compact SUVs under $30,000 are the most popular. Almost all are foreign-made and will face tariffs,” said Erin Keating from Cox Automotive.
The new 25% tariffs on vehicles and parts will affect almost all major car brands, whether foreign or American. While the goal is to boost U.S. auto manufacturing, the immediate impact will be higher car prices for consumers.
Even vehicles assembled in the U.S. are not fully safe from price hikes, as many still rely on foreign parts. This could push even basic, affordable models above $30,000, making it harder for many Americans to buy new cars.
If you’re planning to buy a car in 2025, it’s best to stay informed, compare prices, and watch how the market reacts to these new tariffs.