Tuesday's the day when US tariffs against imports from Canada and Mexico are set to kick in, and one industry in particular is nervously eyeing what happens next. Bloomberg reports that the 25% upcharge imposed on our two neighbors is expected to drive up the costs of cars in the US by thousands of dollars, according to a new study by automotive consultancy Anderson Economic Group, with consumers likely bearing the brunt of the additional expense. "That kind of cost increase will lead directly—and I expect almost immediately—to a decline in sales of the models that have the biggest trade impact," says Anderson Economic Group chief Patrick Anderson.
Bloomberg notes that even before the Trump administration's tariffs entered the picture, the average sticker price for a new car was nearing $50,000, which is more than 20% higher than it was five years ago. AEG now estimates it will cost about $4,000 more to build a crossover utility vehicle, while the manufacturing costs for an electric vehicle could spike by as much as $12,000. Two recent analyses cited by Kelley Blue Book anticipate the tariffs will raise the price of a new car by $3,000, on average. Some car models made only in Canada and Mexico might disappear altogether for a while in the States.
KBB notes that the Canada/Mexico fees are just one of four sets of tariffs that Trump has warned could be put in place, with aluminum and steel tariffs and "reciprocal" tariffs also on the table. Fortune reports the tariffs could cause car insurance prices to spike, too. Even conservative media outlets are wary over the possible repercussions. "If the goal is to harm US auto workers and Republican prospects in Michigan, then by all means go ahead, Mr. President," the editorial board of the Wall Street Journal wrote last week. For illustrative purposes, the Washington Post follows the journey of one car part to show how the tariffs "could rattle the auto industry." More here. (More tariffs stories.)
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