There's been plenty of talk in the news lately about how tariffs are going to affect the economy in general, but the auto tariffs impact is likely to be one of the greatest changes consumers will see. Car tariffs are going to have a major impact on the sticker price of all vehicles, including those that are assembled in the United States.
What Are Car Tariffs?
A tariff is a tax that is assessed on the value of a good at the time that it is imported to the country. The automotive tax is based on a percentage of the value of the vehicle or parts being imported and must be paid by the company or consumer before the goods will be released from customs.
How Auto Tariffs Impact Costs
Tariffs will have wide-ranging impacts on the cost of vehicles moving forward, even for domestic companies like Ford who rely on long standing supply chains to source raw materials and parts. Some experts say that car prices are likely to increase by $5,000-10,000 overnight. Here's a look at a few areas where tariffs are likely to hit hardest:
Steel and Aluminum
The first phase of tariffs on steel and aluminum is already in play, making it harder for auto manufacturers to source the raw materials that are used to build vehicles of all kinds. While the US does produce a significant quantity of steel and aluminum, auto manufacturers are scrambling to form new connections and strike deals before their assembly lines are disrupted.
Parts
Downstream from the steel and aluminum tariffs is the newest set of tariffs levied against the automotive industry specifically. This 25% tariff lands squarely in the middle of the most manufacturers' supply chains, where it is common for parts to cross from the US to either Mexico or Canada and back again before final assembly.
Manufacturers have spent decades building complex webs of warehouses and assembly plants across North and Central America, and now they will have to pay more for to bring those parts back to the US to build vehicles. Ford, like other manufacturers, faces the challenge of either absorbing these higher costs or passing them onto consumers, which could result in higher prices for new vehicles.
What This Means for Ford and Koons Ford Silver Spring Customers
For vehicles that are not normally built in the US, the 25% tariff will apply to the total vehicle cost, which will amount to thousands of dollars added to the sticker price at the dealer. This will impact foreign automakers, but even domestic brands like Ford, which rely on global supply chains, will not be immune to the price hikes.
The 2025 tariff policies, including those targeting steel, aluminum, and automotive parts, are putting pressure on car manufacturers like Ford. While there are efforts underway to alleviate some of the burden, such as the possibility of tariff exemptions for certain parts and reimbursements for vehicles assembled in the U.S., these changes are still likely to lead to higher prices.
