Taxes on Trump's import of cars and car parts.

Customs duties on cars have become 1 of the most hard topics of Trump administration trade negotiations with key partners. To realize this, just look at how much the economies of the countries are dependent on car exports to the US.

For Japan and South Korea, cars and car parts accounted for about a 3rd of their full exports to the US last year. For Germany, this share was almost 20%.

Closer analysis of commercial data and company data shows that the impact of duties varies greatly depending on the company, depending on the location of the vehicle production. any companies have far more effects than others and have more uncertainty about their business and profits.

Among nipponese car manufacturers, Mazda Motor, Subaru and Mitsubishi Motors are peculiarly affected by their large dependence on vehicles imported from Japan. In turn Honda, Nissan and Toyota produce most of their cars in the USA, Canada or Mexico, after years of moving production closer to American consumers.

Trump administration duties on cars produced outside the United States entered into force on 3 April. The duties on passenger cars presently amount to a full of 27.5% of the value of the vehicle – which consists of the applicable highest preference rate (MFN) of 2.5% and an additional 25% imposed for national safety reasons under section 232 of the Trade Expansion Act.

In the case of vehicles from Mexico and Canada which do not comply with the rules of origin (ROO) in accordance with the US-Mexico-Canada Agreement (USMCA), an additional work of 25% under the global Exceptional economical Entitlements Act (IEEP) applies, which increases the full rate to 52.5%.

Even companies that produce more than half of the vehicles sold locally in the U.S. gotta number for billions of dollars in losses due to the fact that imported parts are subject to customs duties. Toyota reported that 25% of the work cost the company around $1.3 billion only in April and May. Honda, which assembles 2 out of 3 vehicles sold by it in the United States, and the remainder in Canada and Mexico, predicts a 70% decrease in net profit in this fiscal year.
A differentiated degree of tariff impact may have crucial implications for the places where companies will yet decide to produce and sale their products. This in turn can decide on their long-term competitiveness in the global market.

1) Adjustment of production — Honda, Nissan, Volkswagen and Mercedes plan to decision the production of certain vehicles to the United States. Mitsubishi, Mazda, Stellantis and Tesla limit supply volumes to the market. Toyota seeks to increase local purchases of components in the long term.

2) Price increases — Mitsubishi, Subaru, Toyota, BMW and Ford have already increased prices. Hyundai and Kia could follow in their footsteps.

3) Exemptions — Stellantis and Nissan implement employment reductions.

Trump's duties begin to change the strategies of car manufacturers besides in the electrical vehicle sector. In this case, companies besides follow divergent paths.

Following dynamic growth in fresh years, the US marketplace for electrical vehicles is presently facing tremendous uncertainty, as the Trump administration is withdrawing from the force of the Biden era to introduce green vehicles. It revises provisions on greenhouse gas emissions (GHG) that predicted a crucial increase in the sale of electrical vehicles, and seeks to abolish California state rules that require all fresh cars sold after 2035 to be emission-free vehicles (ZEV). In 2024, Americans bought a evidence 1.3 million electrical vehicles, an increase of 7.3% compared to the erstwhile year.

The duties on cars increase force in the industry, disrupting already fragile supply chain of electrical vehicles. Tesla temporarily suspended imports of parts from China and Nissan abandoned plans to build a fresh battery mill in Kiusiu, Japan.

In the face of changes in politics and marketplace uncertainty, car manufacturers respond in different ways. Toyota and Subaru increase the presence of electrical vehicles in North America, introducing fresh models, expanding the scope of models and planning local production since 2026. Toyota takes additional steps to attract American consumers by refreshing the brand, expanding coverage and adjusting loading standards.

Meanwhile, Honda withdraws from the investment. It reduced the planned investments from $68 billion to $48 billion and delayed the implementation of major projects, including the construction of a fresh mill in Ontario, Canada. Due to the slower than expected pace of deployment of electrical vehicles and political uncertainty, Honda focuses more on hybrids and motorcycles to keep profitability and defend itself against the risks associated with electrical vehicles.

Nissan, struggling with a decline in sales and net losses, is reportedly negotiating with Taiwanese Foxconn on the production of electrical vehicles at its plant close Tokyo – a drastic step that would mitigate the impact on suppliers and thousands of employees.

In order to accelerate local production of vehicles and components in the US, car manufacturers are increasingly working together, putting long-term competition aside. Honda plans to get batteries up to 400,000 hybrid vehicles from Toyota's North Carolina battery factory, and Ford allows Nissan to usage part of its fresh battery mill in Kentucky. These actions propose moving towards a new, common supply chain as companies cope with the uncertain marketplace for electrical vehicles in North America.

But now 2 things have become clear. Firstly, Trump's approach to customs introduced confusion in companies and in financial markets. Since March employment has fallen sharply in sectors exposed to higher work costs. Secondly, and more importantly, the price of chaos has become a fact and is paid mainly by working Americans.

Trade wars uncover how much Trump sold his political electorate. Customs duties increase prices for American consumers, both straight and indirectly. Customs duties on imported finished goods and components utilized in home production are transferred straight to consumers through higher prices, as we have seen in the case of coffee. Customs duties besides restrict abroad competition by expanding import costs. This failure of competition can stimulate an increase in home prices, as we have seen in the case of duties on imported solar panels.

Car manufacturers produce any models in the US for sale, others for export and yet others import. With the increase in duties on car parts from 2.5% to 25%, on steel from 0% to 50% (original) and on finished cars from 2.5% to 25%, costs increase in all 3 areas.

Jeep's producer, Stellantis, reported an expected failure of $2.7 billion in the first half of 2025, partially due to duties. General Motors reported a failure of $1.1 billion in customs duties on imported cars and parts in the second 4th of 2025. Ford Motors estimates that duties will cost the company $1.5 billion in 2025.

We will see how the working Americans will bear the full strength of these increases in customs costs, customs duties on imported vehicles from Asia and Europe, and, to a certain (still uncertain) degree, from Canada and Mexico, higher car prices.

Bessent added in another interview with CNBC that he expects that the gross from the Trump presidency's duties will exceed his erstwhile estimates of $300 billion, and this money will be spent on paying off national debt alternatively than on discount checks for Americans.

"I said customs gross could be $300 billion this year. I will gotta revise this much," Bessent said.

Earlier this week, the S&P Global Ratings credit rating agency confirmed the long-term US credit rating at AA+ level with a unchangeable perspective, claiming that customs gross would aid offset the fiscal effects of the fresh taxation law and president Trump's spending.

Polish Prime Minister Donald Tusk met with automotive manufacture leaders to measure the impact of fresh US duties on car parts. Poland ranks 7th in the planet in terms of automotive parts exports, and manufacture experts fear a possible GDP decline of 0.45% and the failure of up to 13,000 jobs. Tusk stressed that it is more crucial to find real solutions than to divorce the "customs war".

]]>https://www.youtube.com/embed/E6iyzHUp0L8]]>

]]>https://www.hinrichfoundation.com/research/article/trade-distortion-and-...]]>
]]>https://thehill.com/opinion/finance/545999-auto-tariffs-impact-consumers/]]>

]]>https://finance.yahoo.com/news/live/trump-tariffs-live-updates-the-us-an...]]>