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Donald Trump’s proposed tariffs could raise car prices, impacting U.S. and European automakers.
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Tariffs could cost automakers 17% of annual revenue and lead to credit downgrades, S&P Global said.
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General Motors, Jaguar Land Rover, Stellantis and Volvo could be the hardest hit.
President-elect Donald Trump’s new tariff proposals could hit American and European automakers hard — and drive up prices for your next car.
A Friday note from S&P Global honey one 25% rate on Canadian and Mexican imports, coupled with a 20% tariff on light vehicle imports from the EU and Britain, could cost some automakers 17% of their annual revenues – and even more than 30% – before interest, taxes , depreciation, and depreciation.
Higher tariffs could hit General Motors, Jaguar Land Rover, Stellantis and Volvo the hardest, S&P Global said. Meanwhile, BMW, Ford, Hyundai and Mercedes-Benz may be less affected.
“Donald Trump’s re-election is likely to amplify the headwinds the global auto industry will face in an already challenging 2025,” the authors wrote.
These tariffs could drive up car prices and cause Americans to dig deeper into their pockets for another vehicle. Wells Fargo estimated Wednesday that tariffs could increase the price of U.S.-made cars by an average of $2,100. For vehicles produced entirely in Canada or Mexico, U.S. prices could rise between $8,000 and $10,000 higher, Wells Fargo estimates.
Kelley Blue Book data from October shows that the average transaction price for new cars in the U.S. was more than $48,600.
Trump announced Monday that on his first day in office he would sign an executive order that would impose a 25% tariff on all goods from Canada and Mexico and would remain in effect until “drugs, specifically fentanyl, and all illegal alien creatures” stop this invasion of our country!”
The US is highly dependent on its neighboring countries for its cars. Data from the US Department of Commerce shows that the US imports more than 2.3 million cars from Mexico every year. Of all US trade in the first three quarters, Mexico accounts for almost 16%, while Canada accounts for 14.5%. Business Insider has previously detailed the exact car makes and models that could be most affected.
Trump is also expected to cut the $7,500 tax credit for EV purchases included in President Joe Biden’s Inflation Reduction Act, which would likely reduce EV sales.
Both Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau have spoken out against the tariff proposals.
Sheinbaum suggested Tuesday that Mexico could impose its own tariffs on the US, adding that Mexico has been affected by the smuggling of drugs and weapons from the US.
Trudeau said Friday that the tariffs would have negative consequences for both Canadians and Americans.
“Our responsibility is to point out that not only would he harm Canadians who work so well with the United States, but he would actually raise prices for American citizens and harm American industry and business.” , Trudeau said.
Read the original article on Business Insider
