How Trump’s Auto Tariff Will Shake the Industry
A look at the President’s proposed 25% car tariff on imported vehicles and car parts
Updated September 18, 2018
Donald Trump has recently made big news with his proposed 25% tariff on all imported cars and car parts in the hopes of securing fairer trading terms for the U.S. with foreign parties.
While many would assume this tariff would only impact those interested in purchasing vehicles from foreign manufacturers, even domestic giants like Ford and GM use a large percentage of imported parts in their vehicles.
Apart from vehicles costing more, the proposed tariff is also a huge threat to hundreds of thousands of U.S. dealership and manufacturing jobs in the auto industry as limited production leads to limited profits and limited job availability, according to experts.
Read on to find out how President Trump’s proposed auto tariffs will affect ten of the best-selling vehicles on the market.
(Data gathered from the NHTSA, U.S. News and World Report, and Kelley Blue Book)
10. Honda Civic
The Honda Civic sold 377,286 units in 2017, and is ranked #3 among compact cars on the market. According to KBB, a new Honda Civic could run you anywhere from $19,835 – $27,695. A standard 4-door Civic is made from 60% domestic parts, while 20% of its parts come from Japan. More notably, however, is the 5-door Civic hatchback, which is only 15% domestic. The average price of the hatchback is about $23,300, which means the proposed car tariff could see a spike in 5-door models of about $2,600.
9. Honda CR-V
The Honda CR-V sold 377,895 units in 2017 and is the #1 ranked vehicle among compact SUVs, which is one of the most rapidly growing markets in the auto industry. KBB says a new CR-V will cost between $25,245 – $35,145. The CR-V is actually 65% domestic, so despite the higher price tag, this vehicle is only going to see about a $1,000 bump in price if Trump’s new tariff is applied.
8. Ford Escape
The Ford Escape is ranked #2 among compact SUVs and sold 308,296 units in 2017. With an MSRP ranging from $24,935 – $34,485 and a domestic parts volume of 60%, the Escape manages to miss a good chunk of the proposed automotive tariff’s hit. Still, buyers could expect prices to rise in excess of $1,000 if the trade war is further escalated.
7. Ford F-150
It might come as a surprise to some that arguably the most American truck in existence is actually only 65% American. With 896,764 units sold across the entire F-Series in 2017, Ford trucks make up an absolutely massive share of the market both domestically and abroad. With a huge price range of $35,640 – $65,670, it should come as no surprise that despite being mostly manufactured in the U.S., the F-Series pickups could be seeing some rather substantial price jumps if the automotive tariff goes into effect.
6. Toyota Corolla
The Toyota Corolla sold 308,695 units in 2017 and despite seemingly falling out of grace as the #15 ranked compact car, it is still one of the most widely known names on the market. With a rather small price gap of $19,520 – $23,700 and a domestically-produced parts percentage of 60%, the Corolla sees a price jump of around $1,200. Even more shockingly, however, is the Corolla iM, which is entirely imported and uses 0% domestic parts. Even a base model could fetch a price of $4,700 more than the current MSRP should Trump’s tariff go into effect.
5. Honda Accord
The Honda Accord has been winning accolades left and right in the past few years and is widely regarded as one of the best cars on the market. Ranked #2 in midsize cars by USN and having sold 322,655 units in 2017, the Accord is no small fish on the market. Produced 60% in the U.S., the Accord doesn’t have much to worry about, but with a higher price tag of $24,465 – $36,695, the Accord may take more of a hit than expected. In fact, the hikes could amount to as much as $3,000 depending on the chosen trim and options.
4. Toyota Camry
The Toyota Camry is the most well-known name in the automotive industry aside from the Volkswagen Beetle, and is the #1 mid-size car on the market. It sold 387,081 units stateside in 2017 while a new model could run you anywhere between $24,565 – $36,020. Produced using 30% foreign parts, the price hike could see an increase of $2,000+ dollars for higher-end variants.
3. RAM 1500
The RAM 1500 sold only 500,723 units in 2017, it’s actually ranked #1 in full-sized trucks compared to the F-150’s #2. The RAM is produced about 70% stateside, so despite the F150 seeming like the more American of the two, this is actually factually incorrect. With a rather large price range of $34,690 – $58,590, the RAM 1500 could see price hikes upwards of $3,400.
2. Nissan Rogue
The Nissan Rogue has seemingly taken the compact SUV market by storm despite being ranked #10 in the segment. With 403,465 units sold in 2017, it’s one of the best-selling models out there. Unfortunately, the Rogue is produced about 55% outside of the U.S., giving it one of the highest potential tax margins of the crossover market.
1. Toyota RAV4
Of course, everyone knows the Toyota RAV4. Toyota’s most iconic crossover sold 407,594 units in 2017 and is ranked #12 in compact SUVs. Ranging from $25,705 – $37,445 and with a domestic percentage of just 35%, the RAV4 takes one of the biggest hits of the cars commonly sold in the industry with a potential price spike of upwards of $4,700.
While some of these cars are going to see huge jumps in price if the new automobile tariff actually goes into effect, they’re essentially nothing compared to the likes of the high-end luxury car market which is almost entirely imported across the board. Most German luxury vehicles are produced entirely in foreign markets and imported to the U.S. which means that their entire MSRP is taxable under the new tariff.
This change has the potential to dramatically shift the global and U.S. automotive market in a profound way, so if you’re going to buy a car, you’d better get to shopping before prices skyrocket.