The Blubber

The announcement of a 25% tariff on all imported passenger vehicles and critical auto parts, set to take effect on April 2, triggered a sharp sell-off in both foreign and domestic auto stocks.

Analysts have long cautioned that such tariffs would likely drive up car prices as the U.S. auto industry scrambles to adapt.

In a Wednesday note, Wedbush analysts described the new tariffs as “a hurricane-like headwind to foreign (and many U.S.) automakers,” warning they could increase the average price of a vehicle by $5,000 to $10,000, depending on the make, model, and price tier.

The Anderson Economic Group also estimated that the levies could add between $4,000 and $12,000 to vehicle prices, with electric vehicles particularly vulnerable due to their reliance on imported batteries and electronic components.

Cox Automotive projected that tariffs on imports from Canada and Mexico — also set to begin April 2 — could increase the cost of U.S.-built vehicles by more than $3,000. That comes on top of earlier price hikes of $300 to $500 from previously imposed tariffs on steel, aluminum, and a 20% duty on all Chinese imports.

Major automakers are raising concerns as well. The Alliance for Automotive Innovation — which represents companies like GM, Ford, and other leading U.S. manufacturers — warned earlier this month that the proposed import taxes could push vehicle prices up by as much as 25%.

Automakers with significant operations in Mexico — including GM, Ford, Toyota, Nissan, and BMW — are expected to be especially impacted.

Barclays analysts cautioned that 25% tariffs on vehicles imported from Mexico and Canada could potentially wipe out profits for Ford, GM, and Stellantis.

Even automakers like Tesla, which assemble the majority of their vehicles in the U.S., aren’t immune. The new duties apply not just to complete cars, but also to essential auto parts such as engines, powertrains, and electrical systems.

Despite domestic assembly, Tesla and others rely heavily on international supply chains. Regulatory filings show that 20% to 25% of components in Tesla’s 2025 models are sourced from Mexico.