Foreign-imported cars and light-duty trucks may soon start increasing their US price tags by over $7,000.
Why? The Trump administration’s new 25% tariff on all automobile imports. It comes right on the heels of a 20% steel and aluminum tariff, as well as a China-focused tariff, and it will be followed in early May with another tariff aimed at auto parts.
To learn about how these taxes will affect you, we checked in across a wide range of impacted industries and countries. Read on to hear from Canada’s prime minister – he’s not happy – as well as see which automakers have it worse. Trump ear-bender Elon Musk should be ecstatic: Tesla, Inc. will likely do the best, since about 80% of its cars are domestic.
How Do the New Tariffs Work?
The hubhub all stems from an executive order President Donald Trump signed on Wednesday. Starting just next week on April 3, the order calls for a 25% tariff on all automobile imports to the United States.
What about vehicles that were partially made in the US? The White House has an answer: It provided a fact sheet about the tariffs that clarifies this caveat. Any tariffs applied to the automobiles imported under the Canada-U.S.-Mexico Agreement (CUSMA) will only count towards the value of elements that were not made in the United States.
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In other words, Canadian and Mexican automakers will still suffer the full brunt of the tariffs. And, while the Trump administration has announced and then paused other tariffs for Canada in the last month, Trump claims that this one is “permanent.”
Canadian Prime Minister Mark Carney called the duties a “direct attack” on Canadian autoworkers that’s “entirely inconsistent” with CUSMA and “the long history of relations in the auto sector right back through the Auto Pact,” a 1965 trade agreement between Canada and the US.
Automotive Logistics Will Have a Rough Year
What kind of impact will these tariffs have? Logistics news source The Lodestar checked in with investment bank Jefferies, which calls the new duties the “most heavy-handed and simplest option.”
Jefferies estimates that, if these tariffs were around this time last year:
- They would have affected eight million vehicles
- They would have increased the price by $7,600 per imported car
- Ford will be less impacted than GM and STLA.
Transport Topics notes another automaker that will come out a winner due to the new tariffs: Tesla, Inc., which sees around 80% of its vehicles built domestically.
There’s one bit of good news, however: Heavy-duty trucks appear to be exempt from the tariffs, at least so far.
However, a second tranche of tariffs aimed at auto parts is expected on May 3, and will likely impact trucks, due to the entire US auto industry’s reliance on global supply chains. Provided these tariffs result in supply chains being rebuilt within the US, it’s the consumers who will likely fare the worst, since costs will rise and US automakers may deliver a lower quality product without global competition.
…But Cargo Frontloading Is Boosting Short-Term Profits
All the uncertainty from the new tariffs has resulted in a short-term benefit for the shipping business. However, the Port of Los Angeles just saw its second-best February on record, according to Executive Director Gene Seroka. Seroka was speaking at a March 19 press briefing, so it wasn’t in response to the new 25% tariffs. However, the new tariffs may lead to another short-term shot in the arm for the same reason: Cargo frontloading.
In logistics, the term “frontloading” refers to increasing efforts or costs at the beginning of a project period, a practice that reduces uncertainty and ensures everyone stays on track. Since the new tariffs – like the 25% steel and aluminum tariffs for all countries that were imposed earlier in March – are making shippers uncertain about how costs may fluctuate down the road, they’re all increasing shipments now in order to hedge against any upcoming changes.
In the case of LA’s port, Seroka expects consistent volume growth across the first and second quarters, and he predicts a 10% drop in volume in the second half of the year.
The Trump administration added 20% tariffs on imports from China earlier this month, which reduced cargo shipments from China to LA down to 43% of the port’s traffic, down from 57% before the change.
In other news, US rail traffic increased more than 5% year-over-year for the fourth week in a row.
US and Canadian Steelworkers Face Layoffs
According to a new Freight Waves article, the US-based Cleveland-Cliffs Inc. is laying off more than 1,200 steel and mine workers in Michigan and Minnesota. The company cites market conditions as well as “weak automotive production” in the U.S. Last month, Canadian steelmaker MPG Canada laid off 140 positions, citing the US tariffs.
Part of the problem is the low demand for US cars: Within months, one forecaster has dropped from predicting 16.3 million vehicles sold in the US in 2025 to just 15.6 million.
Once the tariffs have been in place for a while, we may see a reversal of the US layoffs – but given the uncertainty surrounding the amount and size of all the tariffs that might be issued, it’s impossible to say when that might be.
Meanwhile, Canadian steelworkers aren’t optimistic about their job security. Canada-based Algoma Steel has laid off about 20 people, citing customer loss due to tariffs.
A Canada-focused reader survey from TruckNews.com puts a face to the insecurity that many workers in the country feel right now. One of them writes: “If these tariffs continue, I will probably lose my job in three months!” Another respondent says they “have been hauling organic grain to the same WA-state company for over 30 years. With the 25% tariff, they are looking to buy from within the U.S. and Argentina. Last load delivered March 4. Unless things change, I have lost my job.”
Will Canada and Others Counter the Tariffs?
We’re still waiting to see how any of this shakes out, but there’s a chance that Canada, Mexico, or the EU may work to counter the range of freshly imposed tariffs with their own US-specific tariffs. If so, Trump promised to continue escalating, according to a Truth Social post on Thursday.
“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!” -Trump
The tax increases seem set to keep rising for the near future.
While you wait to see what ultimately happens, we recommend stocking up on toilet paper: Canadian softwood lumber tariffs recently doubled, reaching 27%, and US toilet paper prices are expected to soar as a result.
