- President Donald Trump’s 25% tariffs on imported cars and car parts will cause “pure chaos” in the auto industry and hike car prices by up to $10,000 or $15,000, wrote analysts at Wedbush Securities. Although Trump has said the tariffs are aimed at bringing auto manufacturing to the U.S., the analysts said this effort would take years and be mired in extra costs and complexity.
Cars will get thousands of dollars more expensive and no carmaker, not even Elon Musk’s Tesla, will benefit from President Trump’s 25% auto tariffs, according to Wedbush Securities analysts.
As they currently stand, the tariffs on imported cars and auto parts will cause “pure chaos” in the industry and lead to major price hikes, the analysts wrote in a Friday note.
“Every auto maker in the world will have to raise prices in some form selling into the U.S. and the supply chain logistics of this tariff announcement heard around the world is hard to even put our arms around at this moment,” the analysts wrote.
The price hike could be as much as $10,000 to $15,000 on the high end, wrote the analysts—and even Tesla, Elon Musk’s EV maker, would not be immune.
“The winner in our view from this tariff is no one….as even Tesla still is hit from these tariffs and will be forced to raise prices,” the analysts wrote.
In total, Trump’s “untenable head scratching” tariffs will add an estimated $100 billion burden to the auto industry that will be passed onto the consumer on day one, the analysts added.
On Saturday, Trump said his auto tariffs will be permanent and shrugged off concerns that carmakers will hike prices, telling NBC News that “I couldn’t care less. I hope they raise their prices, because if they do, people are gonna buy American-made cars.”
Although Trump has said the tariffs are aimed at bringing auto manufacturing back to the U.S., the analysts predict it would take three years to bring back just 10% of the auto supply chain to the U.S. Even then, it would cost billions of dollars and would come with complexity and disruption as between 40% and 50% of the auto parts used for U.S.-made cars are imported from abroad.
The 25% auto tariffs are just the first of several to be announced as part of what Trump is calling “Liberation Day,” on April 2. Congressional Budget Office director Phillip Swagel has estimated the tariffs already announced by Trump will bring in $800 billion in customs duties over the next decade.
Still, stocks have been rocked over the past several weeks due to uncertainty over tariffs. The S&P 500, which tracks the broader market, was down about 2% as of Friday afternoon. The index was on track to close down for the week for a fifth time over the past six weeks.
Still, Trump has not backed down from his tariff threats despite the stock-market woes. The president has warned U.S. automakers not to raise their prices in response to tariffs, and has said the U.S. must become a “manufacturing powerhouse.”
