Here's how much the planned Trump tariffs would add to the average car price

MW Here's how much the planned Trump tariffs would add to the average car price

By Claudia Assis

Shares of car-parts maker Aptiv among the first to be downgraded as 'tariffs and uncertainty rule the roads'

President Donald Trump's tariff plans for Canada and Mexico would add about $2,700 to the $48,000 average price of a car in the U.S.

That's from analysts at Jefferies, who did the math by applying a 25% import duty to the $172 billion gross value of vehicles and parts imported from Canada and Mexico.

The roughly $43 billion in industry costs would translate into an additional $2,700 on the $48,000 average price of a vehicle as applied across 16 million cars sold, which is about the average annualized number.

The plan rattled the stocks of U.S. carmakers and car-parts makers, even as most market observers think the tariffs will be in place for a brief period, if they are enacted at all.

Don't miss: Here are the automakers hit hardest by the tariffs on Mexico and Canada

Trump said on Monday that the anticipated tariffs on Mexico would be paused for a month to allow the two governments to negotiate.

The U.S. president also said he and Canadian Prime Minister Justin Trudeau spoke Monday morning and planned to speak again at 3 p.m. Eastern time.

A worst-case scenario would be permanent Mexico and Canada tariffs resulting in double-digit earnings hits to the three main U.S. carmakers $(GM)$ (AT:FORD) $(STLA)$, assuming the companies "do not pass through tariffs to the consumer, which they would," RBC Capital analyst Tom Narayan said.

However, Narayan and others have noted that most investors do not believe the tariffs will be permanent, but rather "short-lived as some deal is struck between countries."

Tariffs of 25% on Mexico and Canada and 10% additional tariffs on China would "immediately increase prices on everything from crude oil to auto parts to electronics," said Mark Malek, chief investment officer at Siebert Financial.

"Tariffs are paid by U.S. businesses and consumers, not foreign governments," Malek said.

Even if companies were to seek out other suppliers, supply-chain changes take time and have their own associated costs, as the world learned during the pandemic, he said.

Also on Monday, Brian Gesuale at Raymond James downgraded Irish-American auto-parts supplier Aptiv Plc. $(APTV)$ as "tariffs and uncertainty rule the roads."

Gesuale's team cut their rating on Aptiv's stock to market perform, the equivalent of hold, from outperform. They also lowered their estimates on the company "to reflect ongoing auto industry challenges."

-Claudia Assis

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February 03, 2025 12:48 ET (17:48 GMT)

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