Trump Tariffs Could Make Your Next Car $12,000 More Expensive: Expert Says 25% Fees Will 'Have A Sharp Negative Effect On Auto Sales'

The automotive sector could be among the sectors most affected by President Donald Trump‘s tariffs.

Experts size up the potential cost increases and consumer impact.

What Happened: Automobiles made in Mexico and Canada and auto parts imported to the U.S. are now subject to 25% tariffs under a plan that went into effect Tuesday.

A new study from Anderson Economic Group estimates the cost to build an electric vehicle could rise by $12,000. The average cost to build a crossover utility vehicle could rise by an average of $4,000, as reported by Bloomberg. SUVs and pickups with "significant" parts from Mexico could rise by $9,000 and $8,000 respectively according to the report.

"That kind of cost increase will lead directly — and I expect almost immediately — to a decline in sales of the models that have the biggest trade impacts," Anderson Economic Group CEO Patrick Anderson told Bloomberg.

New tariffs could hurt automakers General Motors Company GM, Ford Motor Company F and Stellantis NV STLA. Leaders from the company met with the Commerce Department last week to warn of tariff consequences.

"Tariffs on the scale that President Trump has threatened would have a sharp negative effect on auto sales," Anderson added.

Some of the bestselling vehicles like the Chevrolet Silverado, Ram pickup, Mustang Mach-e and Ford Bronco Sport SUV are among those that could be impacted by the tariffs, according to the report.

Automakers will likely have to decide if they pass on all the rising costs to the consumers and/or if they get rid of several models that are now impacted by the tariffs and focus on the American-made models.

AlixPartners Managing Director Dan Hearsch estimates that the tariffs could lead to 500,000 fewer vehicles being sold in the U.S.

"Some of those vehicles that can't be produced in the US just probably won't be made for a while," Hearsch told Bloomberg.

Why It's Important: The rising costs of new automobiles could come at a bad time for the sector with new vehicles already priced at an average of more than $50,000.

Ford CEO Jim Farley previously warned that a 25% tariff on Mexico and Canada could "blow a hole in the US industry" that has never been seen by the sector before.

It remains to be seen how long the tariffs will last and whether Detroit’s Big 3 (Ford, General Motors, Stellantis) can survive. Many of the automakers worked hard to get as many products and auto parts into the U.S. ahead of Tuesday.

The Detroit Big 3 are still recovering from union strikes that previously shutdown plants. Ultimately, workers received increased wages, an event that impacted the economy of Michigan and other Midwest states. With tariffs now impacting the automotive industry, Michigan and other states that rely heavily on automotive production could see slowdowns and increased economic concerns.

Benzinga previously wrote on tariffs being the potential end to the sub-$30,000 vehicles in America. Several popular vehicles that sell for under $30,000 in the U.S. are currently built in Mexico.

Around one-third of all vehicles below $30,000 were built in Mexico according to the Wall Street Journal, up from one-fifth of all vehicles at this price point 10 years ago. The report included vehicles from Ford, Honda, Kia, and Nissan.

Mexico has often been a place for manufacturing American automobiles that are known for their cheaper price points to help offset some of the costs of production. Around four million vehicles are made in Mexico annually, according to the report. Close to 70% are exported to the U.S.

The signing of the North American Free Trade Agreement, also known as NAFTA, saw American companies turn to Mexico for cheaper labor rates. Mexico also offered ample land to build large manufacturing facilities.

Small sedans and SUVs, some of the most affordable options for consumers, are often manufactured in Mexico. The lower production costs help automotive companies turn a modest profit on these vehicles. This would likely result in losses if they’re produced in the U.S.

JPMorgan analysts expect automakers to take a hit on profits as a result of the tariffs. Some of the costs are likely to be shared with dealers, suppliers and consumers, Reuters reported.

Tariffs could cost General Motors $14 billion in EBITDA and Ford around $6 billion. This represents around 100% and 75% of General Motors and Ford's expected 2025 EBITDA respectively.

Price Action: Ford stock is down 2.7% to $9.14 on Tuesday. The stock is down 5.1% year-to-date in 2025.

General Motors stock is down 3.0% to $45.94 on Tuesday. The stock is down 10.6% year-to-date in 2025.

Stellantis stock is down 4.5% to $11.78 on Tuesday. The stock is down 7.8% year-to-date in 2025.

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