47th President Donald Trump announced a 25% tariff on cars, which will come into effect on April 2nd. This came months after public speculation concerning a tariff on cars. A tariff is when the government imposes taxes on goods imported from a different country, which is often used to raise revenue. In this case, Canada and Mexico are the countries mainly affected by these tariffs.
The United States economy is built on imports and exports from other countries. Some of the most popular American cars are made in Canada and Mexico, so Americans will see a price hike in their favorite cars. Some include the Ford Bronco, Maverick, and Mustang Mach-E; Chevy Silverado; most of the Dodge lineup except the Durango; and more. Some cars, like Honda’s Civic and CR-V, are split between the USA and Canada.
Consumers in the United States will turn to different solutions to try to evade the tariff. For example, caranddriver.com states, “A 25 percent tariff on imported vehicles is expected to push more buyers toward used cars.” Due to the tariff, used cars will most likely draw more attention, causing used car costs to rise. This is a result of supply and demand, which is when changes in the interest in a product lead to changes in its price.
When Donald Trump was asked about this issue, he said, “I couldn’t care less. I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty.”
Most people wonder who will be affected the most by these tariffs, and CNBC.com says Slovakia would be the most economically impacted. They state, “Germany’s car industry is in the eye of the storm and by far the most exposed in terms of value. But Slovakia, home to several car plants, is most exposed in total US export volume.” Slovakia produces more cars than any other country in the world, nicknamed the “Detroit of Europe,” and car exports play a large role in its economy.
According to Edmunds’ list of most popular cars in California, the Tesla Model Y is the most common, followed by the Toyota RAV4, Tesla Model 3, Honda Civic, and Toyota Camry. Californians will be negatively affected because the RAV4 and Civic are split between the US and Canada. Tesla will also increase its prices because most parts are imported.
This is a chart showing the percentage of imported cars per company. According to the chart, Geely/Volvo was the most impacted among all the other car brands, as almost 90% of their cars were imported. Mazda and Volkswagen follow closely behind with about 80% of their cars being imported. Tariffs will leave a huge negative impact on any company that relies on importing cars, and we are likely to see the value of some of these companies drop as time goes on.
The tariffs imposed by President Trump will heavily affect many companies and will cause shockwaves in the US. In the future, we will see the tariff’s long-term effects and how the world will change because of it.
Sources:
https://www.cnn.com/2025/03/29/business/car-tariffs-prices-explained-dg/index.html
https://www.cnn.com/2025/03/29/business/trump-auto-prices-tariffs/index.html
