Key Details on the New U.S Tariffs: What to Expect
1. Automotive Tariff of 25% on All Imports
- Effective Date: April 3, 2025
- Rate: 25% on passenger vehicles and light trucks, as well as key automotive parts (engines, transmissions, powertrain parts and electrical components).
- Applies at Every Stage: The tariff is charged each time a component enters the USA. That means raw materials, modules, and fully assembled vehicles will all be subject to the tax as they move through production.
- To be determined if tariffs of key automotive parts extend to commercial vehicles such as medium & heavy-duty models (class 4 – 8).
- To be determined how key automotive parts will be covered by the US, Mexico, Canada (USMCA), which would prevent tariffs from applying to certain parts. USMCA replaced NAFTA.
2. How This Impacts Vehicle Costs
- USA-Assembled Vehicles (Using Imported Parts)
Added cost: Estimated at $3,000+ per vehicle
- Imported-Assembled Vehicles (Regardless of Country)
Added cost: Estimated at up to $10,000+ per vehicle
3. Tariff of 25% on Imported Steel, Aluminum, and Copper
- Effective Date: March 12, 2025
- Raw Materials: As an example, bar stock of steel and aluminum
- Finished Goods: As an example, engine blocks, cylinder heads, complete engine assemblies
- Effect of the imported aluminum and steel Tariff versus the Tariff on imported vehicles and automotive parts: Both tariffs will apply (25%+25%=50%)
4. Reciprocal Tariffs
- Announced on April 2, 2025
- At this time not incremental to automotive, steel or aluminum tariffs previously announced.
5. What This Means for the Market
Automakers are working on pricing models to determine how much of the increased costs will be passed on to consumers.
Tariffs can change without notice, creating uncertainty for production and pricing strategies.
Immediate effects may include:
- Reduced production and availability
- Fewer manufacturer incentives
- Higher prices on pre-tariff inventory as demand shifts
Final Thoughts
These new tariffs will have wide-reaching effects on the cost of vehicles and the broader supply chain. Consumers, dealers, and automakers should prepare for higher prices, potential inventory shortages, and evolving manufacturer strategies in response to the increased costs.
