Tariff Troubles: Your Next Car Could Cost a Fortune

In a recent statement, Trump pledged to implement a 100% tariff on all vehicles entering the U.S. from Mexico if he wins the November election. During speeches and interviews, he even mentioned raising the tariff to as much as 2,000%, emphasizing that he wants to discourage foreign car sales in the United States. “You make it so high, so horrible, so obnoxious,” he remarked, explaining that the extreme tariffs would force automakers to relocate production to the U.S.

Such steep tariffs would directly impact many vehicle brands manufactured in Mexico, including Ford, GM, Toyota, and Volkswagen. In 2023, Mexico exported around three million vehicles to the United States, making up a significant portion of the American car market. Tariffs on this scale could mean a drastic increase in prices for cars made abroad, which would ultimately be passed on to American consumers.

Impact on Consumers

The immediate effect of these tariffs would be a steep rise in consumer car prices. The cost of popular models like the Toyota Camry could potentially double, making once-affordable vehicles financially out of reach. This isn’t limited to foreign-made cars; domestic automakers might raise prices as demand shifts from imported to US-manufactured vehicles. This could lead to a scenario where car buyers are left with limited affordable options, facing higher prices across the board.

With new vehicle prices climbing, consumers could also see a spillover effect on the used car market. As buyers seek more affordable alternatives, demand for used vehicles will likely increase, pushing prices higher and impacting both new and used car buyers. This broad rise in costs could force some consumers to delay or forgo car purchases altogether, reshaping buying behaviors in a way that ripples across the entire market.

According to Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, these tariffs would not only increase car prices but could also lead to significant job losses. Gleckman notes that automakers may struggle with higher production costs and decreased sales due to inflated prices, which could result in thousands of layoffs across the industry. He adds that contrary to Trump’s intentions, the tariff plan might harm U.S. workers rather than help them.

Trump’s tariff proposal has sparked considerable debate, with supporters viewing it as a means to boost American manufacturing and opponents warning of severe economic consequences. If enacted, the plan could reshape the U.S. auto industry, though likely not in the way Trump envisions. Instead, the tariffs may lead to a market where foreign and domestic vehicles become significantly more expensive, impacting consumer choices and the broader economy.