Trump tariffs could make your next car more expensive

• Donald Trump’s proposed tariffs could drive up auto prices and impact U.S. and European automakers.
• S&P Global said the tariffs could cost automakers 17% of annual profits and lead to a credit downgrade.
• General Motors, Jaguar Land Rover, Stellantis and Volvo could be hardest hit.

President-elect Donald Trump’s new tariff proposals could hit American and European automakers hard – and drive up the price of your next car.

A Friday Note from S&P Global Estimates a 25% tariff on Canadian and Mexican imports, coupled with a 20 percent tariff on light vehicle imports from the EU and UK, could cost some automakers 17% of their annual income – and even over 30% – before taking into account interest, taxes, depreciation, and amortization.

According to S&P Global, higher tariffs could hit General Motors, Jaguar Land Rover, Stellantis and Volvo the hardest. Meanwhile, BMW, Ford, Hyundai and Mercedes-Benz could be less affected.

“The re-election of Donald Trump will likely increase the headwinds the global automotive industry will face in an already difficult 2025,” the authors wrote.

These tariffs could drive up car prices and cause Americans to dig deeper into their wallets for another vehicle. Wells Fargo estimated Wednesday that the tariffs could increase the price of U.S.-made cars by an average of $2,100. For vehicles made entirely in Canada or Mexico, prices could be $8,000 to $10,000 higher in the U.S., Wells Fargo estimates.

Kelley Blue Book data from October shows the average transaction price for new cars in the U.S. was over $48,600.

Trump announced Monday that he would sign an executive order on his first day in office that would impose a 25% tariff on all goods from Canada and Mexico and would remain in effect until “drugs, particularly fentanyl, and all illegal immigrants.” “Stop this invasion of our country!”

The USA is heavily dependent on its neighbors for its cars. Commerce Department data shows the U.S. imports more than 2.3 million cars from Mexico annually. Of total U.S. trade in the first three quarters, Mexico accounted for nearly 16%, while Canada accounted for 14.5%. Business Insider previously detailed the car brands and models that could be most affected.

Trump is also expected to cut the $7,500 tax credit for electric vehicle purchases included in President Joe Biden’s Inflation Reduction Act, which would likely lead to a decline in electric vehicle sales.

Both Mexico’s President Claudia Sheinbaum and Canada’s Prime Minister Justin Trudeau have spoken out against the tariff proposals.

Sheinbaum suggested Tuesday that Mexico might impose its own tariffs against the United States, adding that Mexico has been hurt by smuggling drugs and weapons from the United States.

Trudeau said Friday the tariffs would have a negative impact on both Canadians and Americans.

“Our responsibility is to point out that not only would it harm Canadians who work so well with the United States, but that it would actually raise prices for American citizens and harm American industry and the economy,” Trudeau said .