New Round of Auto Tariffs Could Reshape the Industry

• New Round of Auto Tariffs Could Reshape the Industry
• As reported by CNN.
• Here are the details.

Starting this Saturday, a new round of auto tariffs takes effect in the United States—this time targeting parts—which could have a greater impact than previous tariffs on imported vehicles.

As of 12:01 a.m. Miami time, most auto part imports will be subject to a 25% import tax.

This measure could permanently reshape the auto industry by raising the cost of vehicle manufacturing.

And in the long term, it could affect prices for buyers.

New Round of Auto Tariffs Could Reshape the Industry

A new round of auto tariffs just took effect. They could change the industry forever.
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— CNN en Español (@CNNEE) May 3, 2025

Unlike earlier tariffs, which left U.S.-built cars untouched, this new policy also affects vehicles assembled within the country.

In fact, more than 50% of the content in vehicles assembled in U.S. plants comes from imports.

Economist Jonathan Smoke, of Cox Automotive, noted in a recent webinar that these new tariffs could be more damaging to the economy than earlier taxes on imported vehicles.

While parts from Canada or Mexico that comply with USMCA (United States-Mexico-Canada Agreement) standards will be exempt from tariffs, most Mexican-made parts will still be taxed.

On the other hand, the U.S. government has implemented a temporary measure to assist manufacturers by reimbursing a portion of the tariff costs during the first three years.

General Motors and Ford Warn of Economic Impact

General Motors lowered one of its earnings projections as the automaker prepares for the potential impact of auto tariffs.
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— Periódico AM Noticias (@periodicoam) May 1, 2025

Nonetheless, the impact is expected to be substantial, with additional costs from the tariffs on auto parts potentially reaching $4,000 per vehicle, according to estimates.

Major automakers like General Motors and Ford have already issued warnings about the economic toll.

GM estimates that the tariffs will cost the company between $4 billion and $5 billion this year, although vehicle prices are not expected to increase immediately.

However, these added costs are likely to affect other areas of the sector, such as vehicle maintenance and repairs, driving up inflation in those services and impacting all Americans.

The Industry’s Main Challenge

#International || Trump reaches agreement with automakers to reduce tariffs
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The primary challenge for the industry is the complexity of determining which vehicle parts are truly “domestic.”

Despite efforts to implement selective tariffs, many U.S.-made vehicles contain components from around the world, making it difficult to enforce rules on exempt parts.

Additionally, imports of auto parts from Mexico exceed $82 billion annually, but most of these parts do not meet USMCA requirements and will therefore be subject to the new tariffs.

Impact of a New Round of Auto Tariffs

Altogether, these new auto tariffs could represent up to $60 billion in added costs for the industry.

And while exemptions and reimbursements may offer some relief, analysts warn that the overall impact could be significant for both the industry and consumers.

Automakers and buyers alike must prepare for changes in cost structures and production dynamics that could reshape the industry permanently.

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