A trade group representing nearly all major carmakers warned on Tuesday that new 25% tariffs on imports from Canada and Mexico imposed by US President Donald Trump will lead to drastic price increases.
"All carmakers will be impacted by the tariffs on Canada and Mexico," said John Bozzella, who heads the Alliance for Automotive Innovation that represents all major carmakers in the US except Tesla. Members include General Motors Ford, Toyota, Volkswagen, Hyundai and Stellantis.
"Most anticipate the price of some vehicle models will increase by as much as 25%, and the negative impact on vehicle price and vehicle availability will be felt almost immediately."
Carmakers have sounded the alarm that the tariffs will disrupt the integrated supply chain across North America that has been in place for more than 25 years. Some car parts can cross a border six or more times before final assembly.
"You can't relocate automotive production and the supply chain overnight. That's the challenge and the dilemma: auto tariffs in North America could end up increasing costs on consumers before jobs come back to the country," Bozzella said.
Stellantis told dealers on Tuesday the carmaker continues to engage with the Trump administration on the tariffs that would add a "cost burden" impacting customers.
"Because the industry is highly integrated across North America, the tariffs will put Stellantis' flagship Chrysler, Dodge, Jeep, and Ram brands at a competitive disadvantage versus Korean, Japanese and European importers," the carmaker said in an e-mail seen by Reuters.
Many carmakers met with commerce secretary Howard Lutnick last week to urge the administration not to move ahead with broad tariff hikes.
Last month, Ford CEO Jim Farley warned 5% tariffs on Mexico and Canada would "blow a hole" in the US auto industry. "What we're seeing is a lot of cost, a lot of chaos," he said.
The United Auto Workers praised Trump, noting his plans for further tariff actions in April.
"We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class," the union said. "We look forward to working with the White House to shape the auto tariffs in April to benefit the working class."
The American International Automobile Dealers Association noted dealers are facing rising vehicle and parts prices and high interest rates. "Tariffs could directly contribute to thousands of extra dollars on sticker prices," the group said.
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