On April 2, US President Donald Trump announced a 25% tariff on imported cars, set to take effect on April 3. While the Trump administration claims this measure aims to revitalize the American automotive industry, many experts have raised concerns about the potential negative impacts.
They argue that the tariff will increase production costs for automakers, raise vehicle prices, and ultimately lead to decreased sales, potentially resulting in significant layoffs within U.S. automakers and harming the economy and consumer interests. This move is seen as "shooting oneself in the foot."
Analysts note that the US government believes the tariff will encourage consumers to purchase domestic products, thereby achieving its goal of "revitalizing manufacturing." However, recent data contradicts this outlook. German automakers Volkswagen and BMW reported increased sales in the US market for the first quarter. Volkswagen announced on April 2 that it sold approximately 87,900 vehicles in the US, marking a 7.1% year-on-year increase. Audi, a subsidiary of Volkswagen, also saw an 8% sales increase in March. BMW's US sales for the first quarter reached about 87,600 vehicles, up 3.7%, with electric vehicle sales growing over 25%. According to Deutsche Presse-Agentur, the recent rise in sales of German cars may be due to consumer concerns about the implications of the new tariffs, prompting earlier purchases.
On March 31, Reuters reported that two major business groups in Michigan jointly sent a letter to the White House strongly opposing the new tariff policy. The letter highlighted that over 1,000 automotive suppliers operate in the state, and one in five jobs is automotive-related, contributing approximately US$300 billion to the state's economy annually. The implementation of tariffs, leading to increased costs, could severely disrupt supply chains, forcing working-class and middle-class families to bear higher vehicle costs.
Furthermore, the report stated that nearly all new cars priced below US$30,000 in the US rely on imports, as American automakers like General Motors and Ford have strategically abandoned the production of low-priced models. Industry analysts warn that the new tariffs will compel automakers to cease producing affordable vehicles, further limiting options for working-class consumers.
The Peterson Institute for International Economics (PIIE) predicts that the tariffs could lead to an average increase of about US$10,000 in new car prices, causing US auto sales to shift from an annual growth of 1% to a decline of 3%. Under pressure from rising inflation, consumers may delay purchases or turn to the used car market, further driving up prices in that sector. Ultimately, the tariffs are expected to harm rather than help the US automotive industry, accelerating the hollowing out of domestic manufacturing.
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