US car industry coalition warns new parts tariffs will hike prices and cut sales

A coalition of US car industry groups on Tuesday urged President Donald Trump not to impose 25% tariffs on imported parts, warning they would cut vehicle sales and raise prices.

Trump said earlier he plans to impose tariffs of 25% on car parts no later than May 3.

“Tariffs on car parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher car prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles more expensive and less predictable,” said the letter.

The letter from the groups representing General Motors, Toyota, Volkswagen, Hyundai and others, went to US trade representative Jamieson Greer, commerce secretary Howard Lutnick and treasury secretary Scott Bessent.

The government agencies did not immediately comment.

The letter was signed by the Alliance for Automotive Innovation, the trade group representing nearly all major carmakers, the American Automotive Policy Council, representing the Detroit Three carmakers, the National Automobile Dealers Association, as well as Mema, also known as The Vehicle Suppliers Association, and others.

“Most car suppliers are not capitalised for an abrupt tariff-induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,” the letter added, noting “it only takes the failure of one supplier to lead to a shutdown of a carmaker’s production line”.

On April 14, Trump said he was considering a modification to the 25% tariffs imposed on foreign car and car parts imports from Mexico, Canada and other places. Trump said car companies “need a little bit of time because they’re going to make ’em here”.

Ford Motor said last week it may raise prices on its new vehicles if Trump’s car tariffs continue.

An analysis by the Centre for Automotive Research published earlier this month found Trump’s 25% tariffs on automotive imports, implemented on April 3, will escalate costs for US carmakers by about $108bn (R2-trillion) in 2025.

Reuters