The US automotive industry sure faces a rough 2025. Compounded by the dreadful economic aftermath of the virus that shan't be named, the auto tariffs introduced by the second Trump administration will make cars, pickup trucks, and sport utility vehicles even pricier.
First and foremost, a 25% duty on imported passenger vehicles and light-duty trucks went into effect at the beginning of April 2025. This import tariff extends to major components that include engines, transmission, electrical components, and everything in between. Considering how many automakers produce automobiles in both Canada and Mexico for the US market, said tariff can be described as a serious blow to the automotive industry and the consumer alike.
The latest development in Trump's on-again-off-again tariff saga is more serious, yet presented as nothing more than incentivizing domestic auto production. Reading between the lines, the new rule greatly benefits the folks at Tesla to the detriment of the Detroit Big Three and foreign automakers with assembly plants in the US. Not exactly a coincidence, right? Under the recent proclamation, automobiles produced in the United States with 85% parts made in the US, Canada, or Mexico will not face any tariffs in the first year. The threshold increases to 90% the following year.
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