Since day one, everyone has warned of the immense costs that would result from the auto tariffs U.S. President Trump first threatened and finally imposed – and which have been followed by Canadian counter-tariffs.
We now have a more precise idea of those costs, thanks to an analysis conducted by the Center for Automotive Research, which is based in Ann Arbor, Michigan, not too far from the Motor City, Detroit.
The analysts found that the 25-percent auto tariffs imposed by the U.S. administration at the beginning of April will cost automakers around $108 billion USD - for 2025 alone.
For the three American manufacturers alone - Ford, General Motors and Stellantis - the organization estimates the cost at $42 billion USD. On a more micro level, the analysis even concluded that for the Big 3, customs duties could increase the average cost of a new vehicle by $5,000 USD, this when calculating the parts imported from elsewhere that are necessary for their manufacture. For each vehicle imported whole, the average cost increase is $8,600 USD.
It goes without saying that carmakers cannot absorb that kind of across-the-board cost increase without heading quickly into bankruptcy. Those carmakers will have little choice to pass most of the cost on to consumers.
And increased prices will, logically, lead to new-vehicle sales dropping. Carmakers will lose more revenue, and jobs will be in danger.
Hence all those warnings by experts that this trade war has no winners.
As well, this is why shares of companies related to the automotive sector have all been declining since the tariffs came into effect on April 3rd.
Ford, GM and Stellantis intend to continue discussions with the administration in order to reach a common agreement aimed at increasing American auto production and promoting its growth, rather than harming it. Where those discussions lead, nobody can claim to know at this point.