New cars will probably become much more expensive in the United States when President Trump imposes new tariffs on foreign-made cars and auto parts.
Barring exceptions, tariffs of, say, 25 percent on cars and parts made in Mexico and Canada would add $3,000 even to the cost of cars assembled in the United States, said Jonathan Smoke, chief economist at Cox Automotive, a market research firm. Automakers depend on components from Mexico and Canada.
Cox estimates that tariffs would add $6,000 to price of a car made in Mexico or Canada, two of the top exporters of vehicles to the United States. Affected models include the Toyota Tacoma pickup, gasoline and electric versions of the Chevrolet Equinox, and several models of Ram pickups. Ram is owned by Stellantis, which also produces Dodge, Chrysler and Fiat vehicles.
Higher prices will deter buyers and force automakers to curtail production, Mr. Smoke said. He forecast that U.S. factories would produce 20,000 fewer cars per week, about 30 percent less than usual.
“By mid-April we expect disruption to virtually all North American vehicle production,” Mr. Smoke said on Wednesday during a conference call with clients and reporters. “Bottom line: Lower production, tighter supply and higher prices are around the corner.”
In addition to the impact on car buyers, tariffs could hurt Americans who are employed in factories and car dealerships.
About one million people in the United States are employed in auto and parts manufacturing, according to the Bureau of Labor Statistics. Another two million work at dealerships that sell cars or parts. If automakers are forced to significantly reduce production, they are likely to furlough workers at factories, and dealers would have to cut jobs if higher prices led to fewer sales.