MW Trump's automobile tariffs reportedly may target finished vehicles, not parts. That's still tough for the industry.
By Victor Reklaitis
Companies may have to decide whether to eat the cost of importing vehicles, pass along the extra expense to buyers or spend money to set up a U.S. factory to assemble vehicles
President Donald Trump and his trade team are thinking about imposing tariffs on finished vehicles coming into the U.S. but not on automotive parts, according to a Wall Street Journal report citing Republican Sen. Bernie Moreno of Ohio and other people familiar with the discussions.
The report comes as Trump is expected to hold a news conference in the Oval Office around 4 p.m. Eastern time to announce tariffs on the car industry.
If Trump's new tariffs are not aimed at car parts and instead only target finished vehicles that are imported, that still looks likely to cause headaches for the industry. Companies would have to decide whether to eat the cost of importing vehicles, pass along the extra expense to buyers or spend money to set up a U.S. factory to assemble vehicles.
Factory relocations are tough, Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, said in a recent interview with MarketWatch. Most cars sold in the U.S. and made in Mexico are cheaper entry-level vehicles, while companies largely manufacture higher-margin SUVs and pickup trucks in the United States.
"Moving production of vehicles takes a lot of investment and a lot of time. It's not something that can be done quickly," Fiorani said.
Frank DuBois, a professor at American University's Kogod School of Business, has made similar points. Carmakers can't suddenly build a plant in the U.S. and find suppliers for that plant, especially if they don't know if tariffs will be in place over the long term, DuBois told MarketWatch last month.
-Victor Reklaitis
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March 26, 2025 16:00 ET (20:00 GMT)
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