According to The Wall Street Journal, about a third of all American cars priced below $30,000 are made in Mexico. This includes the Ford Motor Co. (NYSE: F | F Price Prediction) Maverick, the entry-level vehicle of its huge pickup business. New tariffs on vehicles imported from Mexico could be 25% or higher under the Trump administration. President-elect Trump wrote, “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
Tariffs could also be high for Canadian goods. CNBC pointed out, “There’s growing concern that President-elect Donald Trump’s plan to impose 25% tariffs on Canadian imports would be an existential threat to the country’s recovering automotive industry.”
Five carmakers import from Canada: Ford, General Motors, Honda, Stellantis, and Toyota. Among them, imports to the United States are over 1.5 million cars and light trucks a year.
What will a higher price point mean for these imports? Among other things, Americans might put off purchases. According to S&P Global Mobility, the average age of a car on the American road is 12.5 years. That is up from below 10 years two decades ago. Some of this has been attributed to a large rise in car prices. The average price for a new car in 2019 was $36,834. By 2022, the number was over $45,000.
There is also a theory that cars from the past 20 years were better built than those manufactured earlier.
The tariffs may be in place in four weeks. The consequences for car sales will not be far behind that.
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