LANSING — President Trump unveiled his latest auto tariff plans this week, a set of policies that analysts say will most likely raise prices and disrupt international trade.
Trump said he would impose a 25% charge on cars imported from abroad, along with a separate 25% tax on auto parts.
“The consumer is likely going to see a higher sticker price in the showroom, and they’re likely going to see a decreased availability of product selection,” said Glenn Stephens Jr., executive director of the MichAuto industry group.
Imported cars make up around half of auto sales in the US — in 2024, the country imported nearly a quarter trillion dollars in vehicles.
The US also imports around $150 billion a year in auto parts, a majority of all auto parts used for assemblies in the US.
Even companies usually touted as American-made would likely see significant impacts, since they manufacture cars or source parts internationally.
“There is no such thing as a purely US-made motor vehicle, even one that’s assembled in the United States,” said Jason Miller, interim chair of MSU’s Supply Chain Management Department.
Price increases on the consumer side would likely take a few weeks or months — dealers and manufacturers have current inventory that has not been subject to the tariffs, and some have been stockpiling supplies in recent months.
Most analysts predict an eventual 5-15% increase in new vehicle prices, but say that there are too many uncertainties to make more specific predictions.
“At $49,000 average transaction right now we’re really concerned that it can’t go much higher for the consumer to really affect their desirability to purchase a new vehicle,” Stephens said.
Trump has received support on the tariffs from UAW president Shawn Fain, who says the policies would help create auto jobs and mark the beginning of the end of a “free trade disaster.”
Trump has long said that the tariffs would encourage investment in American manufacturing — but experts say that those shifts would take years, likely raising sticker prices in the short-term.
“Regardless of whether a vehicle is assembled in the united states, its cost is going to go up because of the reliance on imported components, and there is no way we have the manufacturing capacity in the near-term to make all of those components,” Miller said.
Experts also say that the rapid policy changes seen in recent months could work against investment in the US, even if domestic producers would avoid the worst of the tariffs.
“Since you’re looking at investments that need to be good for 20 or 30 years, companies are likely to be hesitant to do that in many instances because, since these tariffs are being imposed by the president, they could also be removed the next day, or removed by the next administration in 2029,” Miller said.