Auto experts project that President Donald Trump’s tariffs are likely to raise the cost of a car by thousands of dollars as soon as this fall, undercutting cost savings he’s promised from getting rid of what he has called “industry-killing” environmental regulations.
Trump’s promise includes removing financial penalties for automakers that don’t meet fuel efficiency standards as a way to provide economic relief to Americans and carmakers. But auto industry experts and analysts said they expect auto prices to rise — and soon — due to ongoing tariffs on automobiles, auto parts and other key components like steel.
“Certainly, if rolling back [Corporate Average Fuel Economy] standards reduces vehicle prices, any sort of tariff will act to offset,” said Chris Douglas, a University of Michigan-Flint professor of economics. “A tariff is just a tax, and any tax is just passed onto consumers in some form.”
Currently, automobiles and auto parts imported into the U.S. are subject to some 25 percent in tariffs, with some exceptions for companies with a large portion of their operations in the United States. (Some countries — like Japan and the United Kingdom — have negotiated lower auto tariffs.) Trump’s tariffs on steel and aluminum imports — now at 50 percent for most of the world’s countries — are also expected to make auto manufacturing more costly in the U.S. and around the world.
