A new report warns that proposed 25% tariffs on Canadian and Mexican auto imports could significantly drive up vehicle prices in the U.S., adding thousands of dollars to the cost of new cars and trucks.
The Anderson Economic Group (AEG) found that electric vehicle (EV) crossovers could see price increases of more than $12,000, while conventional crossovers may rise by at least $3,500.
The tariffs -- which President Donald Trump confirmed March 3 would go into effect as planned March 4 -- will not only affect fully assembled vehicles imported from Canada and Mexico but also the numerous auto parts that cross borders multiple times during the manufacturing process. These additional costs would largely be passed on to American consumers, the study found.
Pickup trucks, a mainstay for small business owners and working-class Americans, could see price hikes of up to $8,000. Full-size SUVs could become $9,000 more expensive, while small cars might increase by $6,200. These estimates do not include potential price impacts from previous steel and aluminum tariffs, which have already raised production costs.
The report comes as the cost of new vehicles in the U.S. has already reached record highs. According to research site Edmunds, the average price of a new car now stands at $47,465, with nearly 20% of buyers paying more than $1,000 per month in car payments.
Trump confirmed the tariffs on Mexico and Canada after a monthlong negotiation window expired. The announcement comes as inflation remains a key economic concern, with the latest Consumer Price Index report showing higher-than-expected price increases.
Executives from major automakers, including General Motors, Ford and Stellantis, have already met with the Commerce Department to warn of the economic fallout from the tariffs. A Bloomberg report noted that Ford and Stellantis urged the White House to focus on vehicles with no U.S. parts content rather than penalizing imports from Mexico and Canada, which are covered under the U.S.-Mexico-Canada Agreement (USMCA).
Ford CEO Jim Farley has criticized the proposed tariffs, arguing they unfairly target North American trade partners while allowing automakers from other countries to benefit from exemptions.
"What doesn’t make sense to me is why we’re having this conversation while [South Korea's] Hyundai-Kia is importing 600,000 units into the U.S. with no incremental tariff, and why is [Japan's] Toyota able to import a half a million vehicles into the U.S. with no incremental tariffs?" Farley said during Ford’s Q4 2024 earnings call.
