How Will Tariffs Increase the Price of Vehicles and Parts in the U.S.?

Automotive tariffs make headlines for good reason. They put pressure on everything from the price of new cars to the cost of vehicle parts. If you’re like most car owners in Plymouth, MN, you want to know what to expect.

Tariffs Affect Everybody

Tariffs between nations aren’t new. However, this latest round targeting the auto industry affects almost everyone across the country. A large percentage of automotive goods are imported from Mexico and China. Tariffs raise the price of those goods, pump up the cost of U.S. manufacturing, and even impact vehicle maintenance.

On average, 15% of annual domestic car sales depend on vehicles and parts sourced from Mexico. The U.S. typically imports $14 billion worth of auto parts from China. Adding tariffs to those figures pushes up prices for everyone from manufacturers and dealerships to repair shops and consumers.

The Results Are Surprising

If you’re thinking about buying a new car, be prepared for possible sticker shock. Get ready to pay more for vehicle maintenance too. The Center for Automotive Research crunched the numbers. A 25% tariff on automotive imports will likely result in the following price increases.

  • Average increase in new car prices – $4,400
  • Price increase for U.S. built-vehicles – $2,279
  • Price increase for imported vehicles – $6,800

Supply Chain Complications

We import a large percentage of our vehicle parts from Mexico and China. Both countries import huge volumes of parts from our manufacturers. Economists call this an integrated supply chain. That interdependence stretches from Canada through the U.S. and into Mexico. China plays a huge role too.

No one country can simply stop buying goods from the other. It takes enormous capital to set up manufacturing operations. It also requires long-term investments in manpower to generate the output necessary to keep the industry going. With or without tariffs, cars and parts still get made, but high tariffs throw an economic wrench into the process.

We’re Holding the Line

Recent steel and aluminum tariffs affected U.S. auto manufacturers, but those issues have been resolved for now. Everyone in the industry is hoping for the best, and we’re doing all we can to stay prepared too.

We’re determined to hold the line with expert vehicle maintenance at affordable prices. All of us at our Plymouth, MN, shop and six other Kennedy Transmission locations look forward to a positive end to these latest tariff headlines.

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