President Donald Trump said the 25 percent tariffs he imposed on imported cars are “permanent” and he “couldn’t care less” if auto company CEOs raise prices on vehicles to account for them.
The new import tax on vehicles will be felt the most at the lower-price end of the market and could disproportionately hit Trump’s working class and rural base, according to Reuters.
In a phone interview with Kristen Welker of NBC News, the Meet the Press moderator asked if the tariffs were “truly permanent,” to which the president replied: “Absolutely, they’re permanent, sure. The world has been ripping off the United States for the last 40 years and more. And all we’re doing is being fair, and frankly, I’m being very generous … Very generous.”
Asked about what his message is to auto CEOs, Trump said: “The message is congratulations, if you make your car in the United States, you’re going to make a lot of money. If you don’t, you’re going to have to probably come to the United States, because if you make your car in the United States, there is no tariff.”
Welker noted there had been reporting that Trump warned auto CEOs not to raise prices. The president said: “No, I never said that. I couldn’t care less if they raise prices, because people are going to start buying American-made cars.”
He added: “I couldn’t care less. I hope they raise their prices because if they do, people are gonna buy American-made cars. We have plenty.”
Welker asked Trump to confirm the point, to which he replied: “No, I couldn’t care less, because if the prices on foreign cars go up, they’re going to buy American cars.”
However, Reuters reports that nearly all low-cost new cars and trucks sold in the United States are manufactured overseas, meaning that the greatest impact of the president’s new tariffs will be on lower-income working-class car buyers, many of whom voted for him.
They will face an additional setback from anticipated increases in used-car prices due to rising demand and dwindling supply as people turn away from higher-priced new vehicles.
New cars priced under $30,000 are becoming increasingly rare as the average new vehicle price nears $50,000. The only way automakers can make a profit on economy cars is by manufacturing them in countries with lower production costs — so they will be hit harder by any new import tax.
Detroit automakers General Motors, Ford, and Stellantis have phased out most entry-level models in recent years to concentrate on highly profitable, higher-end trucks and SUVs. This shift has nearly left the economy vehicle market entirely to Asian manufacturers.
A Reuters review of data from two auto research firms found only 16 models with an average sticker price below $30,000, and just one, Toyota‘s Corolla, is assembled in the United States. All others are manufactured in Mexico, South Korea, or Japan.
The under-$30,000 models built by Nissan, Mazda, Hyundai, Kia, Toyota, Subaru, and Volkswagen are almost all built in Mexico or South Korea, while Honda builds the Civic in Canada and the U.S.
Ford makes its least expensive models, the compact Maverick truck and mid-sized Bronco Sport, in Mexico. The same is true for Jeep‘s most affordable model, the Compass.
Three vehicles from GM priced under $30,000 — the Buick Envista, Chevrolet Trax, and Trailblazer — are produced in South Korea. GM also manufactures hundreds of thousands of its best-selling full-sized trucks in Mexico.
Imposing a 25 percent tariff on these lower-cost cars may lead to price increases that render them unaffordable for their target market or prompt some automakers to abandon them altogether, industry analysts predict.
The rising cost of new vehicles will then push buyers into the used-car market, driving up prices there. Given that many parts are also manufactured overseas, even repairing, maintaining, or insuring an existing vehicle will get more expensive.
As a large proportion of the MAGA political base is tilted toward lower-income, rural supporters predicated toward more affordable cars and trucks, they may feel a disproportionate impact. Approximately half of voters with household incomes below $50,000 annually supported Trump’s 2024 election, along with 56% of voters who do not have college degrees, according to an Edison Research exit poll.
Trump’s argument is that he is looking at the longer term and that the tariffs will spark a boom in the U.S. auto industry despite the profitability of many lower-end vehicles being predicated on being manufactured in places where labor is cheaper.
Further, some experts contend that high import taxes may lead to the opposite effect on the auto industry, as people delay large purchases or reduce unnecessary spending in the face of higher prices of both new and used vehicles.
