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How will carmakers be affected by Trump's tariffs? Elon Musk says Tesla not immune from tariffs as car firms hit
(about 9 hours later)
Watch: US drivers weigh in on Trump's new auto tariffsWatch: US drivers weigh in on Trump's new auto tariffs
A day after US President Donald Trump said he would hit foreign cars and car parts with a new import tax of 25%, many of the world's biggest automakers appeared stunned into silence, as they took in a move expected to wreak havoc across the industry.A day after US President Donald Trump said he would hit foreign cars and car parts with a new import tax of 25%, many of the world's biggest automakers appeared stunned into silence, as they took in a move expected to wreak havoc across the industry.
Investors sold off shares of carmakers in Japan, Germany and the UK on Thursday, wiping billions of value off names such as Toyota, BMW and Jaguar Land Rover.Investors sold off shares of carmakers in Japan, Germany and the UK on Thursday, wiping billions of value off names such as Toyota, BMW and Jaguar Land Rover.
Firms in America were some of the hardest hit, with General Motors down more than 7%.Firms in America were some of the hardest hit, with General Motors down more than 7%.
Shares in Tesla, which is known for its US factories and whose boss Elon Musk is one of Trump's biggest donors and closest advisers, were notably spared from the hit, ending the day flat.Shares in Tesla, which is known for its US factories and whose boss Elon Musk is one of Trump's biggest donors and closest advisers, were notably spared from the hit, ending the day flat.
But Musk warned that even his company would not be immune from the tariff disruption.But Musk warned that even his company would not be immune from the tariff disruption.
"Important to note that Tesla is NOT unscathed here," Musk wrote on social media. "The cost impact is not trivial.""Important to note that Tesla is NOT unscathed here," Musk wrote on social media. "The cost impact is not trivial."
Tesla's Model Y, which topped Cars.com's 2024 index of American-made cars for the third year running, only sources 70% of its parts from the US, according to Patrick Masterson, lead researcher for the list.Tesla's Model Y, which topped Cars.com's 2024 index of American-made cars for the third year running, only sources 70% of its parts from the US, according to Patrick Masterson, lead researcher for the list.
"The major takeaway I think people should know about this is no vehicle is 100% US-made," he said."The major takeaway I think people should know about this is no vehicle is 100% US-made," he said.
"The consumer is going to feel it across the board and I really don't think that any automaker is going to be spared from this, Tesla included.""The consumer is going to feel it across the board and I really don't think that any automaker is going to be spared from this, Tesla included."
The latest tariffs could affect roughly $300bn-$400bn in imports, depending on what parts are affected by the order, according to Macquarie. That amounts to almost 10% of everything the US brings into the country each year.The latest tariffs could affect roughly $300bn-$400bn in imports, depending on what parts are affected by the order, according to Macquarie. That amounts to almost 10% of everything the US brings into the country each year.
It is expected to push up prices by roughly $4,000 to $12,000, depending on the vehicle.It is expected to push up prices by roughly $4,000 to $12,000, depending on the vehicle.
Many major car companies have operations in the US, while also bringing in models, or parts from outside of the US.Many major car companies have operations in the US, while also bringing in models, or parts from outside of the US.
Japan's Toyota, for example, has 10 manufacturing plants in the US and its Highlander SUV ranks highly on the American-made list.Japan's Toyota, for example, has 10 manufacturing plants in the US and its Highlander SUV ranks highly on the American-made list.
But its Prius ships in from Japan.But its Prius ships in from Japan.
General Motors also brings in significant parts and cars from Korea and Mexico, which Volkswagen also relies on heavily, despite assembling the Atlas SUV in the US.General Motors also brings in significant parts and cars from Korea and Mexico, which Volkswagen also relies on heavily, despite assembling the Atlas SUV in the US.
Some firms may be able to redirect work to factories in the US, Oxford Economics has suggested, but it warned that such a move was likely to lead to higher prices and "significantly lower production in the US's main trading partners".Some firms may be able to redirect work to factories in the US, Oxford Economics has suggested, but it warned that such a move was likely to lead to higher prices and "significantly lower production in the US's main trading partners".
The action is likely to have a more significant impact on carmakers exporting from Germany and the UK, which are known for selling fewer, more premium and luxury brands at higher prices, such as Jaguar Land Rover, Mercedes-Benz and Audi.The action is likely to have a more significant impact on carmakers exporting from Germany and the UK, which are known for selling fewer, more premium and luxury brands at higher prices, such as Jaguar Land Rover, Mercedes-Benz and Audi.
Ferrari, which ships its cars from Italy, immediately announced a 10% price hike, to help cover the new cost of the duty.Ferrari, which ships its cars from Italy, immediately announced a 10% price hike, to help cover the new cost of the duty.
As companies are forced to respond to the 25% tariffs, by raising prices or accepting lower profits, some may decide to pull some models out of the US entirely, leading to fewer choices for American consumers, warned Patrick Anderson, chief executive of the Anderson Economic Group.As companies are forced to respond to the 25% tariffs, by raising prices or accepting lower profits, some may decide to pull some models out of the US entirely, leading to fewer choices for American consumers, warned Patrick Anderson, chief executive of the Anderson Economic Group.
This could also lead to carmakers without a current large manufacturing presence in the US, such as Jaguar Land Rover or Porsche, reducing production in their home countries, potentially affecting jobs.This could also lead to carmakers without a current large manufacturing presence in the US, such as Jaguar Land Rover or Porsche, reducing production in their home countries, potentially affecting jobs.
All Mitsubishi cars sold in the US are imported, while Hyundai, which announced plans for a plant in the US earlier this week, ships most of its cars from South Korea.All Mitsubishi cars sold in the US are imported, while Hyundai, which announced plans for a plant in the US earlier this week, ships most of its cars from South Korea.
Trump, who started discussing tariffs on cars in his first term, said his latest tariff enforcement would be permanent, claiming it will boost America's manufacturing base.Trump, who started discussing tariffs on cars in his first term, said his latest tariff enforcement would be permanent, claiming it will boost America's manufacturing base.
It follows previous moves to impose tariffs of at least 20% on goods being imported into the US from China along with 25% levies on some goods from Canada and Mexico.It follows previous moves to impose tariffs of at least 20% on goods being imported into the US from China along with 25% levies on some goods from Canada and Mexico.
A 25% import tax on all steel and aluminium entering America is also already in force.A 25% import tax on all steel and aluminium entering America is also already in force.
He is also set to introduce so-called reciprocal tariffs against individual countries based on their trade balance with the US.He is also set to introduce so-called reciprocal tariffs against individual countries based on their trade balance with the US.
The White House said the car duties would start on April 3, while tariffs on certain car parts are set to come into effect a month later.The White House said the car duties would start on April 3, while tariffs on certain car parts are set to come into effect a month later.
For now, parts made in Mexico and Canada - which have traditionally entered the US under a free trade agreement - will be spared, while officials get custom systems prepared.For now, parts made in Mexico and Canada - which have traditionally entered the US under a free trade agreement - will be spared, while officials get custom systems prepared.
The carve-out for parts from Mexico and Canada, which the White House said would be temporary, was a relief to some in the industry.The carve-out for parts from Mexico and Canada, which the White House said would be temporary, was a relief to some in the industry.
But General Motors is still facing potential increased costs starting at about $10.5bn, according to JP Morgan.But General Motors is still facing potential increased costs starting at about $10.5bn, according to JP Morgan.
Ford's bill would start at roughly $2bn, more than doubling over time as tariffs on parts come into effect, according to estimates from the banking giant.Ford's bill would start at roughly $2bn, more than doubling over time as tariffs on parts come into effect, according to estimates from the banking giant.
It said the added cost across the industry would amount to more than $80bn.It said the added cost across the industry would amount to more than $80bn.
Jennifer Safavian, president of Autos Drive America, which represents international carmakers, said her members were still working out the repercussions of the move and other tariffs that have been recently announced or are looming.Jennifer Safavian, president of Autos Drive America, which represents international carmakers, said her members were still working out the repercussions of the move and other tariffs that have been recently announced or are looming.
But she warned that the measure would lead to higher prices, fewer sales, and less production across the industry.But she warned that the measure would lead to higher prices, fewer sales, and less production across the industry.
"They're trying to digest this," she said. "But again there's no question that these tariffs are going to have an impact on the US auto industry.""They're trying to digest this," she said. "But again there's no question that these tariffs are going to have an impact on the US auto industry."