• U.S. begins 25% auto tariff; automakers halt production and plan domestic output shifts.
• Imported vehicle prices could rise up to US 27,200; parts tariffs begin May 3.
• Canada, China, and E.U. respond with retaliatory tariffs and trade negotiations intensify.

A 25 % tariff on imported vehicles took effect in the United States on April 3, prompting production changes, layoffs, and pricing adjustments across the auto industry. The tariff will extend to imported automotive parts beginning May 3.

The levies, introduced by the Trump administration, are part of a broader strategy to increase domestic manufacturing. In response, companies have begun pausing or shifting production while re-evaluating vehicle pricing.

Automakers and analysts project sharp price increases for both imported and U.S.-made vehicles. Estimates from Anderson Economic Group suggest that prices could rise by U.S. 3,400 to 6,100 for domestically built vehicles, while imports from Europe and Asia could increase by up to 27,200. In 2024, imports made up about 45 percent of U.S. new-vehicle sales. Major suppliers included Mexico, Japan, South Korea, Canada, and Germany.

Volkswagen U.S. Will Indicate Import Tariff as Separate Fee on Window Stickers

Stellantis temporarily laid off 1,000 workers in Michigan and Indiana and paused production at its Windsor, Ontario, and Toluca, Mexico plants. The Windsor plant builds the Chrysler Pacifica, Voyager, and electric Dodge Charger Daytona, while the Toluca facility produces the Jeep Compass and upcoming Jeep Wagoneer S.

Infiniti has suspended production of the Mexico-built QX50 and QX55 for the U.S. market. Volkswagen and Audi have delayed shipments of vehicles built in Mexico and overseas. Some cars are being held at U.S. ports.

In contrast, some automakers are shifting output to U.S. factories. Nissan reversed plans to eliminate a shift at its Tennessee plant. Mercedes-Benz is evaluating a production shift to its Alabama facility, while GM is increasing pickup truck production at its Indiana plant.

Pricing strategies also vary. Volkswagen added a line on window stickers for the import fee to destination charges for vehicles made in Europe and Mexico. Ferrari and Ineos raised prices for U.S.-bound models by up to 10 and 11 %, respectively.

Ford and Stellantis introduced short-term promotions offering employee pricing to all customers. Ford’s discount runs through June 2, while Stellantis’ offer ends April 30. Hyundai has not adjusted pricing but is evaluating potential impacts.

Canada responded by implementing its own 25 % tariff on U.S.-made vehicles. Under the USMCA, only the non-Canadian content of vehicles that meet trade agreement rules is subject to duties. According to Economy Minister Marcelo Ebrard, Mexico is in talks with the U.S. to mitigate tariff impacts within 40 days.

U.S. auto tariffs do not apply to vehicles from Canada and Mexico that comply with USMCA rules, but they will be subject to levies on any non-U.S. content. Auto parts made in those countries also remain exempt until a method for assessing non-domestic content is finalized.

Source: Automotive News

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U.S. Auto Tariffs Prompt Production Cuts, Layoffs and Price Hikes Across Industry