President Trump is imposing a 25% tariff on foreign automobiles, and also on foreign auto parts. “However, companies that import vehicles” from Canada or Mexico under the 2019 “United States-Mexico-Canada Agreement (USMCA) will get special consideration until the Commerce Department establishes a process for levying the 25% duties, the White House said. USMCA-compliant auto parts will remain tariff-free until the commerce secretary, in consultation with U.S. Customs and Border Protection, establishes a process to apply tariffs to their non-U.S. content.
These “tariffs will likely raise prices of foreign-made cars, but even US-made vehicles would see price increases if supplies and parts are hit by levies or if supply chains are cut off from manufacturing in lower-cost countries,” reports Bloomberg News. “Analysts have estimated that new tariffs could increase new-car prices by thousands of dollars per vehicle. One recent study found that tariffs on Canada, Mexico and China would raise the cost to produce a crossover vehicle by about $4,000, while a US-made EV would jump by about $12,000.”
An auto industry analyst says that “these initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many US) automakers and ultimately push the average price of cars up $5,000 to $10,000 .. almost an untenable head scratching number for the US consumer. .. hard to digest.”
These are not the only tariffs imposed by the Trump administration. In March, Trump “imposed a 25% tariff on most Canadian and Mexican goods but later exempted all USMCA-compliant goods until April 2. On March 12, 2025, a 25% global tariff on steel and aluminum products took effect….Canada, China, and the European Union have announced counter-tariffs. “
Jobs have been wiped out by the tariffs imposed by the U.S. and by retaliatory tariffs imposed by other countries in response. “25% of US businesses say they have scaled back hiring plans amid [the] trade war,” reports Channel 5 in Phoenix.
The Wall Street Journal’s Christopher Mims says that “Business leaders all across America are freaking out that Trump’s tariffs will kneecap their firms. ‘There’s an overriding sense of helplessness‘ among executives. ‘CEOs are feeling stunned, and they’re not used to feeling like they don’t have good moves.'”
The Wall Street Journal reports:
as Trump unleashed an on-one-day, off-the-next tariff fight with America’s largest trading partners….the S&P lost $4 trillion in value driven by his whipsaw trade policy, receding optimism about an artificial-intelligence boom, and souring consumer sentiment caused by threats of higher prices and weaker growth. A measure of consumer sentiment fell in March for the fourth straight month to the lowest level since January 2021…Markets in the past week have recovered some losses, but Trump is preparing his next shock: an April 2 “liberation day” suite of reciprocal tariffs he said will be applied on any trading partner that charges tariffs or imposes other trade barriers on U.S. products.
A chart from the FedEx Small Business Trade Index shows small businesses are quite dependent on imports. 42% of small businesses rely “a lot” on imported goods for their business to function, while 46% rely “some” on imported goods for their business to operate. Tariffs increase the cost of these needed imported goods.
As Cato Institute economist Tad DeHaven explains, “Small businesses use imported goods to produce domestic goods. Tariffs increase the cost of foreign inputs and domestic substitutes….Small businesses generally lack pricing power compared to larger firms. Larger companies are better able to absorb cost increases, while smaller firms have more difficulty passing costs onto customers and can lose sales as a result.”
Trump’s tariffs on steel and aluminum will wipe out thousands of jobs in U.S. industries that use steel and aluminum. Past tariffs on steel and aluminum “resulted in 75,000 fewer manufacturing jobs in firms where steel or aluminum are an input into production,” note two economics professors, by subjecting those firms to “increased costs of inputs” that made their products less competitive. That is far more than the paltry number of jobs gained in the U.S. steel industry due to tariffs on steel, only about “1,000 jobs.”
U.S. tariffs also trigger retaliatory tariffs from other countries. In response to Trump’s metals tariffs, Europe imposed tariffs on $28 billion worth of U.S. goods, and Canada imposed tariffs on $21 billion worth of U.S. goods.
American farmers are being harmed by retaliatory tariffs imposed by Canada, Europe, and China. NBC News reports:
U.S. farmers depend on exporting their products because for many products, like corn, the country produces more than it is able to consume. Foreign buyers are also more willing to buy agricultural products people in the United States don’t want, like chicken feet or cow tongues.
But those overseas markets are now in question as Trump threatens to ratchet up the amount of tariffs charged on products being shipped into the United States — a move that is already causing other countries to retaliate with their own tariffs on U.S. goods…..
Farmers say they are already seeing the effects after Trump put an additional 20% tariff on Chinese imports, after which China responded with an additional 10% to 15% tariff on U.S. agriculture products, including pork, wheat and corn.
Tariffs are expected to make auto insurance more costly by increasing the cost of car parts.
