Dealers and Manufacturers Are Wary: Will Trump Impose Tariff?

Proposed tariff—possibly up to 20%—has huge implications for new-vehicle pricing

With his campaign promise to put a stiff tariff on vehicles manufactured outside of the United States, President Donald Trump has automakers scrambling and dealers worried.

The proposed tariff, generally mentioned to be 20%, throws a wrench in auto pricing. If domestic manufacturers move production back to the U.S., they will contend with higher worker costs and lose the investments already made in other countries.

An increase in costs, either from a tariff or greater workforce expenses, will translate to significant vehicle price hikes. This is bad news for the industry because most dealers are already struggling with having to make seven-year loans just to work with consumers’ payment requirements.

Foreign brands have pointed out the international nature of even their U.S.-built cars for many years. You can find a poster somewhere in most Honda, Toyota, or Mazda dealerships that indicates where outside of the U.S. parts for that manufacturer’s vehicles are being made.

The same international nature exists for commercial airplane manufacturers. The graphic on this page identifies the countries that supply parts used to build the Boeing 787 Dreamliner. Although the planes are manufactured in the U.S., many of their parts are not.

It will be interesting to see how the Trump administration will deal with its promise to place a tariff on vehicles made outside of the U.S.

Brett Stevenson


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