Carmakers warn new Trump tariffs will boost costs, cut vehicle sales

A group representing General Motors Toyota, Volkswagen and other major carmakers warned new 25% tariffs US President Donald Trump plans to impose on imported vehicles will hurt US consumers.

"Additional tariffs will increase costs on American consumers, lower the total number of vehicles sold inside the US and reduce US car exports, all before any new manufacturing or jobs are created in the country," said Alliance for Automotive Innovation's John Bozzella.

The group represents every major carmaker including Ford, Hyundai, Stellantis, Honda, BMW and Mercedes-Benz.

Bozzella said the group supports Trump's goal of more US car production. "We are committed to building and investing in the US, but the facilities and supply chains are massive and complex and can’t be relocated or redirected overnight," he said.

The White House did not immediately comment.

Ford CEO Jim Farley told employees in an email on Friday that "the impacts of the tariffs are likely to be significant across our industry, affecting carmakers, suppliers, dealers and customers."

Despite the fact that more than 80% of vehicles Ford sells in the US are assembled in America "this does not mean Ford is immune to the impact of tariffs, which could be meaningful," Farley added.

Other questions remain open, including whether Trump will extend 25% tariffs imposed earlier this month on vehicles assembled in North America that are not exported under a free trade agreement and if he will impose reciprocal tariffs on the EU and others that further hike automotive tariffs.

The White House said last Wednesday it expects the new tariffs on cars and car parts to raise $100bn (R1.84-trillion) in revenue over the next year.

Carmakers may spread the tariff cost between US-produced and imported models, cut back on features, and in some cases stop selling affordable models aimed at first-time car buyers as many of those are imported and less attractive if they carry a higher price tag.