United States President Donald Trump and his allies have offered a solution to avoiding price hikes because of his car tariffs: buy American.
Trump told NBC News on March 29 that he “couldn’t care less” if foreign car manufacturers raised 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 percent tariff on imported cars took effect on April 3, and an additional tariff on imported auto parts is set to take effect on May 3.
Tariffs are a tax on imported goods that businesses pay. Their costs are often passed down to consumers through higher prices.
Fox News host Jesse Watters made a similar statement to Trump on 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.
Bernie Moreno, a Republican senator from 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.”
However, this is contradicted by an analysis by Cox Automotive, a research firm, which found that the “25 percent tariff on imported vehicles will apply to nearly 80 percent of vehicles priced under $30,000”. The analysis cited models such as the Honda Civic, Toyota Corolla, Chevy Trax and Trailblazer, Nissan Sentra and Honda HR-V.
Senator Moreno added that 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 is not so simple to avoid price increases by buying US cars, because those assembled in the US also use imported parts.
“The concept of an American-made car with all parts from the US 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 percent of the value of its parts made in the US or Canada. For the Ford F-150, it is 45 percent.
The Trump administration has said that by raising revenue through tariffs, other federal taxes could be cut. But economists have said it is unlikely that high tariffs could generate enough revenue to result in meaningful tax reductions for typical Americans.
In response to a PolitiFact email asking about Moreno’s statement on US-made cars, a spokesperson for the senator attacked the publication and provided no answers to its questions about cars and tariffs. The White House, when contacted, said that some auto parts are exempted from tariffs.
Many US car manufacturers use imported parts
Moreno said that US-assembled cars that get parts from Mexico and Canada will be “completely tariff-free” if they comply with the US-Mexico-Canada Agreement that Trump’s administration negotiated in 2018.
But many auto parts used in the US 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 that it showed Mexico “clearly top of the list” for car parts imported into the US. China is second (because of lithium-ion batteries), Japan is fourth, South Korea is fifth and Germany is sixth.
Miller said Trump’s other tariffs on steel and aluminium mean that even if a car were 100 percent assembled from only domestic components, costs would still rise because steel and aluminium prices are increasing in the US.
“They just aren’t oversimplifying things, they are outright lying,” Miller said about people saying car shoppers can buy all US-made cars. Also, not all auto parts from Mexico comply with the US-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 percent American-manufactured parts.”
The Wall Street Journal reported on April 4 that, at first glance, Ford is best positioned to weather tariffs because 80 percent of its cars, pick-up trucks and SUVs sold in the US 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 percent tax. The Wall Street 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 (NHTSA) publishes data about the US and Canadian content by value of the parts used to assemble passenger motor vehicles in the US and foreign countries. The data shows that some Toyota car lines built in the US, such as Corolla, include at least 25 percent value of parts imported from Japan.
A Toyota spokesperson said that 47 percent of vehicles the company sold in the US in 2024 were built in the US.
USA Today analysed NHTSA data for multiple automakers and found that “for all models assembled and available for sale in the US, 47 percent of the parts (by value) originated from the US or Canada”.
A Cox Automotive spokesperson said that the average US-made vehicle has about 50 percent of its parts or components by value imported.
Car prices could rise because of Trump’s tariffs
The long-term effect of the tariffs on the car industry us difficult to predict. Cox Automotive predicted strong sales until the 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 US 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 by 10 percent to 15 percent, and at least a 5 percent 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 the price of cars manufactured in foreign countries rises, producers of competing US models with fewer imported parts will raise their prices, not dollar for dollar, but perhaps 40 cents per dollar, Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, predicted.
“US auto manufacturers are hurting, and they will raise prices where they can,” Hufbauer said.
Louis Jacobson contributed to this article.