March 4th could go down as a historic date in U.S. history with President Donald Trump unleashing 25% tariffs on Mexico and Canada while also beefing up existing tariffs on China. All three countries responded with matching trade sanctions and Canada promised the United States will regret their actions. But what will these tariffs mean for consumers and car buyers?
Prices will surge
The new tariffs on Mexico and Canada will cause prices to go up on a multitude of goods but while paying more for avocados or maple syrup at the grocery store will be one part of the equation, the biggest proverbial canary in the coal mine will be the automotive industry with the price of vehicles crossing into the U.S. greatly increasing.
Customers will notice this when they buy their new vehicle at their local dealership. While many vehicles (especially those from the Detroit Big 3) are built and assembled in U.S. plants for the most part, the components and parts that underpin them are built abroad with many of them being built in Canada, Mexico, and China. These parts will be more expensive and when bundled altogether, they rapidly cause the price of the fully assembled vehicle to go up. This is magnified further when you factor in the cost of vehicles already assembled in Mexico and Canada which would also be hit with tariffs when they cross the border.
Could the tariffs spur change?
Analysts say that the price of vehicles could increase by over $10,000, potentially leading to widespread layoffs throughout the entire automotive manufacturing sector as companies try to figure out how to handle the added costs if the tariffs are in place for the long haul. However, others say that Trump could ultimately win in the long run. Tariffs have always been a tool of negotiation between foreign powers and are often powerful reasons for countries to work out trade agreements and other deals to help mitigate the effects of these increased prices on their citizens.
The Trump Administration says “the extraordinary threat posed by illegal aliens and drugs,” played a role in the creation of these tariffs according to a statement published on WhiteHouse.gov. When viewing the White House’s statement at face value, it can be easy to see where they are coming from. The flow of drugs and illegal immigrants has indeed been a potent problem for the U.S. in recent years with fentanyl playing a rapidly increasing role in the deaths of many Americans especially those who often unknowingly bought illicit drugs laced with the powerful substance. According to the Council on Foreign Relations, the drug was responsible for 111,000 fatalities during 2022-2023.
However, Ford CEO Jim Farley revealed that the price citizens had to pay on both sides of the border is not worth it stating “There’s no question that tariffs at the 25 percent level with Canada and Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profit wiped out, and adverse effects on US jobs as well as the entire value system in our industry”. “Tariffs would also mean higher prices for customers.”
Carl Malek has been an automotive journalist for over 10 years. First starting out as a freelance photographer before making the transition to writing during college, his work has appeared on numerous automotive forums as well as websites such as Autoshopper.com.
Carl is also a big fan of British vehicles with the bulk of his devotion going to the Morgan Motor Company as well as offerings from Lotus, MG, and Caterham. When he is not writing about automobiles, Carl enjoys spending time with his family and friends in the Metro Detroit area, as well as spending time with his adorable pets.