Trump's New Tariffs Will Make Your Car More Expensive — Here's Why [Update]

• President Donald Trump's sweeping tariffs go into effect today.
• Cars from Ford, GM, Toyota and more will be subject to the new 25% penalty.
• In addition to the cars themselves, parts for cars made in the U.S. will also become costlier.

Update, March 6: President Donald Trump has given a one-month tariff exemption to companies that comply with the USMCA (U.S. Mexico Canada Agreement). The move comes just a few days after Trump announced sweeping tariffs that were sure to hike prices on cars from Ford, GM, Stellantis, and more. The exemption is for cars that comply with the USMCA's complex rules that require 75% North American content in order to pass across the border into the U.S. duty-free. It also requires at least 40% of all cars' core components (45% for trucks) like engines, transmissions, and body panels to be made in the U.S. or Canada.

Not all cars are compliant with these rules — according to the Office of the U.S. Trade Representative, 8.2% of cars imported to the US from Canada or Mexico were subject to duties in 2023. That said, a large portion of the cars sold here by American automakers do comply with those rules, and the delay will be a big opportunity for the U.S., Canada and Mexico to further talks in an attempt to either delay tariffs further or ensure they don't come fully to pass.

President Donald Trump's sweeping 25% import tariffs on goods from Mexico and Canada went into effect Tuesday. That means cars — along with plenty of other items — are about to get more expensive. 

It's difficult to say exactly how much the tariffs will raise car prices, and prospective buyers won't notice a change overnight. Goods that entered the U.S. before 12:01 a.m. EST on March 4 were not subject to the tariff, so cars on dealer lots right now won't see their sticker prices change. However, some analysts have said prices will rise anywhere from $4,000 to $10,000 depending on make and model. 

But it's not just where the cars are assembled that matters; Canada and Mexico also supply a vast number of parts for cars that are made here in the States. Ford, for example, has a close relationship with Multimatic, a Canadian company that supplied parts for and built the third-generation Ford GT. At the moment, Multimatic is also responsible for the final assembly of the Ford Mustang GTD. 

The North American supply chain for cars is vast, with parts for cars often crossing multiple borders multiple times. The U.S., Canada, China and Mexico all ship parts to and from each other, making the widespread cost of the tariff — and whether it will affect jobs as automakers brace for increased production costs — impossible to know. 

Ford CEO Jim Farley said at an investor conference in February, "If you look at the tariffs, let's be real honest, long term, a 25% tariff across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen." 

The automotive industry has opposed the tariffs because of how closely connected the supply chains between the U.S., Canada and Mexico are. Cars from Ford, General Motors, Stellantis and other American brands all rely on assembly plants in either or both of those countries. Toyota, Honda and GM (among others) build more than 20% of the cars they sell in the U.S. in Canada and Mexico.