By Cole Gee | Staff Writer
Starting Thursday, a 25% tariff on imported cars, auto parts and light trucks will be put into effect. Prices for some cars are expected to increase by $3,000 for an American-made car and possibly $10,000 for an imported one.
These new tariffs are part of a larger plan that the Trump administration has dubbed “Liberation Day.” This plan would involve a series of reciprocal tariffs against other countries he believes are taking away American jobs and wealth.
When asked about how the tariffs may create higher prices last Saturday in an interview with NBC, Trump reinstated his belief that the tariffs will only make the American car industry stronger.
“I hope they raise their prices because if they do, people are going to buy American-made cars,” Trump said. “I couldn’t care less because if the prices on foreign cars go up; they’re going to buy American cars.”
The process of bringing back manufacturing to the U.S. is known as “reshoring,” and it’s been a driving motivation behind Trump’s economic plan. Baylor Economics lecturer Wayne Hampton believes that Trump’s tariffs are a simple means to an end — to boost the American economy.
“You’ve got many companies outside of the United States saying, ‘OK, we’re going to invest in America,'” Hampton said. “‘We’re going to make what we make in America. We can sell it to the Americans, we can sell it to Canada and Mexico. We can sell anywhere in the world.’ So you get around tariffs by moving and investing into the country that’s threatening tariffs and creating jobs.”
However, some manufacturers in the car industry feel differently, with many preparing for a sharp jump in production costs because thousands of the cars Americans drive are produced heavily through foreign manufacturing.
Dr. Van Pham, professor of Economics at Baylor, said he believes these tariffs could have long-term consequences for Mexico, Canada and the U.S., especially since all three countries are major exporters and importers of cars and car parts.
“Canada and Mexico are two of our three biggest trading partners, with China being the third,” Pham said. “A significant number of automobiles are manufactured in Canada and Mexico and shipped to the U.S. Even vehicles assembled in the U.S. rely on an integrated supply chain where parts regularly cross borders from Canada and Mexico. This means with increased tariffs on cars and on auto parts, a single vehicle could potentially be subject to higher tariffs multiple times throughout its production process before finally reaching the consumer.”
Many American cars used on the road don’t fall under the “Made in the USA” standard set by the FTC, which says that a product must have all or virtually all parts manufactured in the U.S. Instead, these cars fall under the standard of “Made in the USA with imported parts,” where the car may be built in America, but the parts have been produced from a separate country.
The Ford F-150 is one of the top-selling vehicles made in the U.S. However, 55% of the parts are manufactured outside the country. Major companies who want to avoid eating the costs of these tariffs would have to move manufacturing into the U.S., but Pham argues this will not be a simple ordeal.
“The administration suggests that because of higher tariffs, in the long run, automobile manufacturers will relocate production to the U.S. rather than producing abroad,” Pham said. “However, companies produce abroad for valid economic reasons, primarily because labor costs in the U.S. are higher. If manufacturers are forced to relocate to the U.S., their production costs will inevitably increase, which has implications for both the industry and, of course, consumers.”
Back in 2024, the U.S. imported $246 billion worth of passenger vehicles with $78.7 billion from Mexico and $31.5 billion from Canada. Both countries have a lot to lose should these tariffs go through and have made it clear they’re willing to retaliate if needed, according to a press release from Canada’s Prime Minister’s office.
“The Prime Minister informed the President that his government will implement retaliatory tariffs to protect Canadian workers and our economy, following the announcement of additional U.S. trade actions on April 2, 2025,” the release read.
