Tariff Impact on Fleets

Tim Cengel

Director, Procurement & Electrification Purchasing

Updates 3/6/25

US import Tariffs on vehicles have been extended an additional 30 days for the US automakers. We have not yet heard of any price increases in place as a result of Tariffs. We’ll update as new information is made available.

Within days of taking office, the Trump administration quickly announced plans to place tariffs on imported goods from Mexico, Canada, and China, but what does that mean for the auto industry. The proposed tariffs would tax 25% on all goods from Canada and Mexico, and 10% on all Chinese goods. The Tariffs on Canada and Mexico have been temporarily delayed, with the promise of new border control initiatives put in place, they are now set to take place in March. It’s unclear if the threat will come to fruition or ultimately be negotiated downward. Much of the auto industry relies on our border neighbors for automotive parts production, automotive manufacturing, engines, and cars themselves.

The establishment of tariff’s could see the average price for a car rise several thousand dollars. Some economists have estimated an average $3,000 increase if the full tariffs stay in place for a considerable amount of time. As a result, the auto industry could see massive changes and waves of layoffs to alleviate the cost of importing parts. This would only add to the skilled auto labor shortage that we currently see, leading to longer production and delivery dates, and higher prices.

Supply Chain:

The automotive supply chain is complex and it’s difficult to quantify the impact on vehicles produced in the US. Parts, engines, and transmissions may be made outside of the US, even though the final assembly is in the US. the cost impact on parts for US made vehicles is unclear. These tariffs aren’t a one-time thing. Vehicle parts can cross our borders several times before reaching final assembly, and the tariff is applied every time. We could also see disruptions as automakers relocate or change suppliers. Automakers have a series of tough decisions soon if the tariffs are upheld. Will they move plants to the United States to circumvent the taxes? If so, the supply chain of parts and vehicle production will likely be disrupted while construction or retooling of manufacturing facilities can be completed and brought up and running. To bring manufacturing back to the states is an investment in time, resources, and comes with a high cost. Vehicle order to delivery times could also be extended if tariffs come to fruition. We may end up seeing delivery dates climb as automakers as they burn through stocked up inventory before having to either import vehicles and parts or produce them here in the states. Currently, OTD times sit at, on average, fifteen weeks, down from the previous eighteen we’ve seen the past couple of years.

Upfitting:

The Trump Administration has also announced they are re-instating the 25% tariffs on steel and aluminum imports, taking effect in March. Raw steel and aluminum are utilized to build most vehicle upfits. In Trump’s first term in office, similar tariffs pushed up costs significantly. Expect upfit costs to increase this time as well.

Ordering:

We urge customers to place orders now and take advantage of the prices as they stand. Putting orders in now is good measure, before automakers must raise them to account for the increased cost of importing vehicles and parts!

Sources:

https://www.just-auto.com/interview/trumps-tariffs-what-could-they-mean-for-the-automotive-industry/?cf-view

https://www.msn.com/en-us/money/markets/heres-how-much-us-car-prices-could-rise-if-trump-tariffs-kick-in/ar-AA1yAUJz?citationMarker=43dcd9a7-70db-4a1f-b0ae-981daa162054

https://www.nbcnews.com/business/autos/trumps-china-tariff-increase-affects-ford-gm-vehicles-billions-dollars-rcna190884?os=wtmb5utKCxk5ref%3Dapp%3Fref%3Dapp&ref=app&citationMarker=43dcd9a7-70db-4a1f-b0ae-981daa162054

https://www.usatoday.com/story/money/cars/2025/02/03/tariffs-will-raise-prices-of-new-cars-spark-layoffs/78186463007/?citationMarker=43dcd9a7-70db-4a1f-b0ae-981daa162054