A new study by Benchmark predicts a significant increase in car prices if President Trump's proposed tariffs on Mexico and Canada are implemented. The study indicates that the average price of a new car could rise by $5,790, reaching over $54,500. This increase is attributed to the substantial reliance of the U.S. auto industry on imports from these two countries, with over 22% of finished cars and 40% of auto parts originating from them. The study highlights the vulnerability of the auto sector to trade disputes and the potential economic consequences for consumers.
A new car would cost about $5,790 more if President Donald Trump's plans for 25% tariffs on Mexico and Canada go into effect, according to an estimate from Benchmark. Benchmark found that more than 22% of finished cars and about 40% of auto parts come to America from the two trading partners. The auto industry is among the 'most exposed' to the risk of higher tariffs, the investment bank said. In an aerial view, Chevrolet cars and trucks are on display at Novato Chevrolet on Jan.
28, 2025 in Novato, California.Americans shopping for cars may need to fork over thousands more if President Donald Trump's proposed tariffs go into effect, according to data from investment bank Benchmark Co. Analyst Cody Acree estimated that the average sticker price would rise about $5,790, based on the impact of the currently paused 25% levies on cars and components from Mexico and Canada. That would raise the cost of an average new car above $54,500, or nearly 12% higher than in 2024. 'We believe the Auto sector is the most exposed to the risks of increased tariffs,' Acree wrote in a note to clients, 'given its sheer size of trade dollars, the complexity of the intertwined supply and manufacturing channel that has been cultivated over decades, and the sheer number of our companies that participate in support of this key consumer industry.'25% tariffs on Canada and Mexico at the start of February, briefly rocking markets, but later suspended the duties for one month after reachingNow, consumers and investors alike wonder what form tariffs will take, or if they'll go into effect at all. Benchmark calculated what 25% levies would mean for the average American's buying power on a popular big-ticket purchase. Benchmark's estimated higher costs for a car is based on more than 22% of finished automobiles sold in the U.S. coming from Mexico and Canada last year. On top of that, the firm said about 40% of parts used in vehicles also come to America from its North American partners. That amounts to more than $200 billion worth of exports to America last year. Specifically, Acree found that Mexico supplied $95 billion in completed cars to the U.S., in addition to $68 billion in parts in 2024. Canada provided more than $36 billion worth of finished cars and nearly $16 billion in components.'President Trump has talked a lot about making our U.S. auto industry stronger, bringing more production here, more innovation in the U.S., and if his administration can achieve that, it would be one of … the most signature accomplishments,' Farley said during a Wolfe Research investment conference. 'So far what we're seeing is a lot of cost, and a lot of chaos.
TARIFFS MEXICO CANADA AUTO INDUSTRY CAR PRICES TRADE WAR ECONOMICS
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