Date: April 11, 2025
By: Chris
A new report from the Center for Automotive Research estimates that the latest 25% tariff on imported vehicles and auto parts could cost U.S. automakers approximately $108 billion. The tariff, implemented on April 3, 2025, is part of former President Donald Trump’s broader push to bolster domestic manufacturing and reduce dependence on foreign supply chains.
Major Implications for the Industry
Despite the intended goals of bringing more automotive production back to the U.S., the study shows that even domestic manufacturers like Ford, General Motors, and Stellantis will be hit hard. These three companies alone are projected to absorb $41.7 billion of the total estimated cost.
Modern automotive manufacturing is global by nature. Many vehicles assembled in the United States still rely on foreign-made parts, often making up over 40% of a car’s components. This means even American-made vehicles aren’t exempt from the tariff’s impact.
Rising Costs for Consumers
The report also outlines how these tariffs will likely affect car buyers. For vehicles assembled in the United States, the average production cost is expected to rise by $4,911. Vehicles manufactured outside of the U.S. could see price increases of over $8,600, including popular models like the Ford Mustang Mach-E and Jeep Compass.
These added costs are expected to be passed down to consumers, potentially slowing sales and further pressuring an already strained industry.
Supply Chain Concerns
Beyond direct manufacturing costs, automakers are also facing disruptions across their supply chains. The increased cost of imported materials could lead to:
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Inventory shortages
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Production delays
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Increased prices for replacement parts and aftermarket accessories
This could also place financial strain on dealerships, repair shops, and suppliers who depend on stable pricing and availability.
The Road Ahead
Automakers are now evaluating their operations to determine whether production shifts, sourcing changes, or price adjustments are necessary. Some may seek exemptions, while others may accelerate investments in domestic manufacturing. However, changes of this scale take time and may not fully mitigate the financial blow in the short term.
The long-term impact of the tariff remains to be seen, but the initial projections underscore the complexity of today’s global automotive economy — and the challenges of reshoring production in a deeply interconnected world.