Automakers are eating the cost of tariffs — for now
Summary
Automakers are currently absorbing the cost of tariffs on materials and imported parts, which have increased due to higher taxes on imports. Despite these additional costs, car prices for consumers have only risen slightly. Carmakers are under pressure from investors to eventually pass these costs on to buyers.Key Facts
- Tariffs on foreign car parts and vehicles have reached up to 25% since the spring.
- Recent trade deals set tariffs at 15% for imports from Japan and the EU, which is still higher than in past years.
- New car prices rose by only 1.2% over the past year, lower than the average increase over the last decade.
- Automakers had stocked vehicles before tariffs took effect, which helps keep consumer prices lower.
- The average new car price is nearly $50,000, with many buyers paying over $1,000 monthly on car loans.
- Companies like General Motors and Volkswagen have absorbed tariff-related costs of over a billion dollars each.
- Some carmakers, like GM, are considering moving production to the U.S. to mitigate tariff impacts.
- Despite tariff-related expenses, major automakers remain profitable for now, though investor pressure is high.
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