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Business & Economy

Can car shoppers avoid tariff sticker shock by buying American brands? It’s not that simple

WOSU 89.7 NPR News | By PolitiFact
Published April 11, 2025 at 11:41 AM EDT
In this image taken from video, electric cars are assembled at a new Hyundai electric vehicle plant in Ellabell, Ga., Wednesday, March 26, 2025.
Russ Bynum
/
AP
In this image taken from video, electric cars are assembled at a new Hyundai electric vehicle plant in Ellabell, Ga., Wednesday, March 26, 2025.

WOSU Public Media partnered with Politifact during the 2024 presidential campaign to provide fact-checking reporting in Ohio.

President Donald Trump and his allies have offered a solution for avoiding price hikes because of his car tariffs: buy American.

Trump told NBC News March 29 that he "couldn’t care less" if foreign car manufacturers raise prices in response to tariffs. "I hope they raise their prices, because if they do, people are going to buy American-made cars," Trump said. "We have plenty."

The administration’s 25% tariff on imported cars took effect April 3, and an additional tariff on imported auto parts is set to take effect May 3.

Tariffs are a tax on imported goods that businesses pay. Their cost is often passed down to consumers through higher prices.

Fox News’ host Jesse Watters made a similar statement April 3: "If you're worried cars are going to cost more, buy American." Watters cited a clip of Ford Motor Co.’s promotion to temporarily give customers its employee rate on cars.

Sen. Bernie Moreno, R-Ohio, who owned multiple car dealerships before taking office, echoed Trump in an April 2 CNN interview.

Moreno said the "only ones that are mostly hurt are the cars that are made overseas, exclusively, and are shipped into the United States. The ultra luxury cars."

That is contradicted by an analysis by Cox Automotive, a research firm, which found that the "25% tariff on imported vehicles will apply to nearly 80% of vehicles priced under $30,000," citing models such as the Honda Civic, Toyota Corolla, Chevy Trax and Trailblazer, Nissan Sentra and Honda HR-V.

Moreno added, among "mainstream cars, a Honda, a Toyota, a Subaru, a Ford, a Chevy, if one car goes up in price, because there's a tariff? That person will just buy the other one that doesn't have a tariff, which is your American-made automobile."

Many car experts said it’s not so simple to avoid price increases by buying American, because American autos assembled in the U.S. also use imported parts.

"The concept of an American made car with all parts from the U.S. is a fictional tale," said Daniel Ives, senior equity analyst at Wedbush Securities. "They will tariff those parts."

Car companies rely on imported parts to varying degrees. For example, the Tesla Model Y has 70% of the value of its parts made in the U.S. or Canada, while the Ford F-150 has 45%.

The Trump administration has said that by raising revenue through tariffs, other federal taxes could be cut. But economists have said it’s unlikely high tariffs could generate enough revenue to result in meaningful tax reductions for typical Americans.

In response to PolitiFact’s email asking about Moreno’s statement on American-made cars, a Moreno spokesperson attacked PolitiFact and provided no answers to our questions about cars and tariffs. The White House, when contacted, said that some auto parts are exempted from tariffs.

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Many car manufacturers in the U.S. use imported parts

Moreno said U.S. assembled cars that get parts from Mexico and Canada will be "completely tariff free" if they comply with the U.S. Mexico Canada Agreement that Trump’s administration negotiated in 2018.

But many auto parts used in the U.S. come from countries other than Mexico and Canada.

Jason Miller, a Michigan State University supply chain management professor, examined auto tariff data and told PolitiFact it showed Mexico "clearly top of the list" for car parts imported into the U.S., but China is No. 2 (because of lithium ion batteries), Japan is 4th, South Korea 5th, and Germany 6th. As of April 10, products imported from China have a 125% tariff.

Miller said Trump’s other tariffs on steel and aluminum mean that even if a car were 100% assembled from only domestic components, costs still would rise because steel and aluminum prices are increasing in the U.S.

"They just aren't oversimplifying things, they are outright lying," Miller said about people saying car shoppers can purchase all American-made cars. Also, not all auto parts from Mexico comply with the U.S. Mexico Canada Agreement, so those are being tariffed, too, he said.

Amy R. Broglin-Peterson, a Michigan State University expert on supply chain management, said, "All vehicles use at least some percentage of foreign parts, period. There is no vehicle model that uses 100% American-manufactured parts."

The Wall Street Journal reported April 4 that on first glance, Ford is best positioned to weather tariffs because 80% of its cars, pickup trucks and SUVs sold in America are manufactured domestically, and so are many of the parts.

Many components of Ford’s F-150s, such as alternators and wheels, come from other countries, and starting in May those parts could face a new 25% tax, the Journal wrote, "so even though Ford’s trucks are built in the American heartland, import tariffs could jack up the average price by thousands of dollars."

The National Highway Traffic Safety Administration publishes data about the U.S. and Canadian content by value of the parts used to assemble passenger motor vehicles in the U.S. and in foreign countries. The data showed that some Toyota car lines built in the U.S., such as Corolla, include at least 25% value of parts imported from Japan.

A Toyota spokesperson told PolitiFact that 47% of vehicles the company sold in the U.S. in 2024 were built in the U.S.

USA Today analyzed NHTSA data for multiple automakers and found that "for all models assembled and available for sale in the U.S., 47% of the parts (by value) originated from the U.S. or Canada."

A Cox Automotive spokesperson said that the average American made vehicle has about 50% of its parts or components by value imported.

Car prices could rise because of Trump tariffs

The tariffs’ long-term effect on the car industry is difficult to predict. Cox Automotive predicted strong sales until pre-tariff inventory declines.

"But all roads lead to this fact: In the coming months and years, as new tariffs settle into place, vehicle prices in the U.S. are expected to increase," Cox wrote in an April 4 market insights report.

Cox predicted that vehicles affected by these tariffs could see prices increase 10% to 15%, and at least a 5% increase for vehicles not subject to the full tariff.

"Production disruptions and declines could be a reality this summer, especially as automakers and suppliers work to align practices with the new rules," Cox wrote.

As prices of cars manufactured in foreign countries rise, producers of competing U.S. models with fewer imported parts will raise their prices, not dollar for dollar, but perhaps 40 cents per dollar, Gary Hufbauer, nonresident senior fellow, Peterson Institute for International Economics, predicted.

"U.S. auto manufacturers are hurting, and they will raise prices where they can," Hufbauer said.

PolitiFact Chief Correspondent Louis Jacobson contributed to this article.

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