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By Hugh Cameron
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President Trump's latest raft of tariffs will impact the U.S. car industry, but not all cars will be equally affected by the new duties.
On Wednesday, the president announced that a new 25-percent tariff will be placed on imported cars and certain foreign-sourced automobile parts.
Why It Matters?
The White House has said the new duties, set to take effect from April 3, are necessary to address the "threat to national security" brought about by a reliance on imports, and expects these to generate $100 billion in annual revenue for the U.S.
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The announcement has already sent European car shares plummeting and, given the duties will also target components used in domestically made cars, the impact has spread to American manufacturers in premarket trading.
As CEOs of certain U.S. carmakers have previously warned, tariffs could drive up production costs, impact prices for prospective car buyers, and reduce overall sales.
What Cars Will Be Affected by the New Tariffs?
The 25-percent tariff will be applied to imported passenger vehicles and light trucks, meaning cars made and assembled entirely within the U.S. using predominantly domestic parts are the least likely to be affected by the new measure.
However, even cars entirely assembled in the country will still feel the impact, depending on how heavily they rely on the imported parts covered by the order—"engines and engine parts, transmissions and power train parts, and electrical components."
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In June, Cars.com created an index of the most American-made automobiles—based on their assembly location, parts content, engine origin and transmission origin, as well as the involvement of an American manufacturing workforce.
Here are the 20 most American-made cars, according to the American-Made Index, and those that are likely to feel the impact of the new tariffs least.
1. Tesla Model Y, SUV
2. Honda Passport, SUV
3. Volkswagen ID.4, SUV
4. Tesla Model S, Sedan
5. Honda Odyssey, Minivan
6. Honda Ridgeline, Pickup Truck
7. Toyota Camry, Sedan
8. Jeep Gladiator, Pickup Truck
9. Tesla Model X, SUV
10. Lexus TX, SUV
11. Toyota Highlander, SUV
12. AcuraRDX, SUV
13. Honda Accord, Sedan
14. Honda Pilot, SUV
15. Acura MDX, SUV
16. Toyota Grand Highlander, SUV
17. Acura Integra, Sedan
18. Acura TLX, Sedan
19. Ram 1500 Classic, Pickup Truck
20. Toyota Tundra, Pickup Truck
According to the White House, importers of automobiles covered by the U.S.-Mexico-Canada Agreement (USMCA), will be able to certify which systems used in their vehicles are U.S.-sourced, meaning the 25 percent tariffs will only apply "to the value of their non-U.S. content."
In addition, USMCA-compliant auto parts will be exempt until the Secretary of Commerce "establishes a process to apply tariffs to their non-U.S. content."
What People Are Saying
President Trump on Wednesday said: "This is very modest, and what we're going to be doing is a 25-percent tariff on all cars that are not made in the United States. If they're made in the United States, there's absolutely no tariff. This is permanent, yeah, 100 percent," Trump added.
Shawn Fain, president of the United Auto Workers Union, said: "With these tariffs, thousands of good-paying blue collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants."
Tesla CEO Elon Musk, in response to the announcement, wrote: "To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial."
Ford CEO Jim Farley said in mid-February that the separate, 25-percent tariffs on Canada and Mexico would "blow a hole" in the U.S. auto industry.
Canadian Prime Minister Mark Carney called the new tariffs a "direct attack" on Canadian workers, adding that he was hopeful to conduct a meeting with Trump soon to discuss the announcement.
What Happens Next?
The tariffs on automobile imports are scheduled to take effect on April 3, according to the White House, while the duties on imported automotive parts will take effect "no later than May 3."
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