Take a wild guess who.
Imagine walking into a dealership ready to buy a new ride only to discover your preferred car, truck or SUV suddenly costs up to $5,000 more than it did not long ago. That situation could very well happen if President Donald Trump succeeds in raising tariffs on imports. If he does, and other countries respond in kind, we're looking at a potential 25 percent tariff which, according to a report from USA Today, would result in increased vehicle prices regardless of automaker.
"If you put that kind of a tariff on a vehicle or an industry, prices are definitely going to go up on average," said Jeff Schuster, senior vice president of forecasting at LMC Automotive, which tracks vehicle manufacturing. "There's no way around that." The average new vehicle sold in the US with various discounts factored in costs about $32,000. That 25 percent tariff will absolutely be passed down to the consumer resulting in a price increase of $4,000 to $5,000 per vehicle. In fact, that estimate already takes into account automakers absorbing half the cost, so do the math. And remember, if automakers absorb that same amount per vehicle they'll have to make cuts elsewhere, such as production and labor.
But what automakers are concerned the most about is reduced sales because who wants to spend up to $5,000 more on a car for no reason other than tariffs? No one. The Alliance for Automobile Manufacturers, an interest group based in Washington, is obviously trying to convince the White House to take a different course of action. "While we understand that the administration is working to achieve a level playing field, tariffs are not the right approach," an Alliance statement said. "Tariffs on autos and auto parts raise vehicle prices for all customers, limit consumer choice and invite retaliatory action by our trading partners.
"Automakers support reducing trade barriers across the board and achieving fairness through facilitating rather than inhibiting trade." To be clear, cars built in the US, whether the automaker is based here or not, will also go up in price. The Kentucky-built Toyota Camry, for example, would increase in price by at least $1,800, according to Toyota. How could this fiasco potentially be resolved? By eliminating all tariffs on vehicles between the US, Europe and China.