Some of America’s bestselling vehicles will see their manufacturing costs soar if President Trump follows through on his threat to slap 25% tariffs on goods made in Canada and Mexico, the United States’ two largest trading partners. This situation was created by the North American Free Trade Agreement, which went into effect on January 1, 1994.
For the time being, tariffs remain merely a looming threat. After signaling its intention to implement tariffs on Saturday, the White House decided on Monday to postpone them for 30 days starting Tuesday, following an agreement from Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum to enhance border enforcement. What comes after those 30 days is anyone’s guess.
China was also hit with a similar 10% tariff on its products.
Toyota
If enacted, Trump’s tariffs will bring higher prices as producers pass along the added 25% cost of tariffs to consumers who voted for Trump to lower inflation.
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New cars will cost more
According to Cox Automotive, the average price of a new car in 2024 was $48,724, a 2.3% increase from the beginning of the year. However, if tariffs go into effect, that cost will surely rise.
Consider that of the top 25 bestselling vehicles in the U.S. market last year, nine were manufactured in Canada or Mexico, including the Ram 1500, Toyota RAV4, Honda Civic, Chevrolet Equinox, Toyota Tacoma, and Nissan Sentra, among others.
Honda
While most cars that come to the U.S. market are sourced from a single plant, others come from multiple plants. For example, while the Chevrolet Silverado 1500 and GMC Sierra 1500 are built at GM’s plant in Silao, Mexico, many are built in Flint, Michigan, Fort Wayne, Indiana, and Springfield, Ohio. Similarly, while most Honda Civics are sourced north of the border, the Honda Civic Hatchback is manufactured in Greensburg, Ohio.
Costs are already rising
Even if your car is not made north or south of the border, parts of it, including engines, transmissions, and other components, are likely made there.
Inevitably, automakers will raise prices to cover the added cost across their lineups. In fact, it’s already about to happen.
The Wall Street Journal reported Tuesday that domestic steel prices are already rising in anticipation of the new duties despite the fact that the tariffs have not yet gone into effect. According to the Census Bureau and the American Iron and Steel Institute, 35% of imported steel in 2024 came from Mexico or Canada.
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The tariffs’ impact will vary
While all vehicles will see a price increase due to the economic impact of tariffs, entry-level vehicles built in Mexico could be greatly affected. This impacts some automakers more than others.
Among the most vulnerable is financially troubled Nissan, which makes its entry-level Kicks, Sentra, and Versa in Mexico. Similarly, Volkswagen’s Taos and Jetta are both built there, as is the Honda HR-V. But larger, healthier automakers such as Honda and VW are better equipped to ride out the turmoil caused by the possible levy.
How to determine where a car is built
If you’re considering a new car, SUV, truck, or van, the Monroney sticker, the price sticker affixed to the windshield, lists the country in which it was assembled and where the engine and transmission were built. Vehicles that weigh more than 8,500 pounds, as well as motorbikes, are exempt from using Monroneys.
Yet you can still discern where a vehicle was built by checking its VIN number, a standardized 17-digit vehicle identification number mandated by the National Highway Traffic Safety Administration on all new vehicles. The VIN’s first number or letter identifies where the vehicle was produced. For those built in the United States, it starts with a 1, 4, or 5. Those built in Canada start with a 2, and for Mexico, 3. For Japan it’s J, South Korea is K, L is China, England is S, Germany is W, and Sweden or Finland is Y.
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Vehicles built in Mexico
- Audi Q5
- BMW 2 Series Coupe, 3 Series, and M2
- Chevrolet Silverado 1500, Blazer EV, Equinox, Equinox EV
- Ford Bronco Sport, Maverick and Mustang Mach-E EV
- GMC Sierra 1500 and Terrain
- Honda HR-V and Prologue EV
- Jeep Compass
- Jeep Recon EV
- Jeep Wagoneer S EV
- Kia K4
- Mazda Mazda3 sedan and CX-30
- Mercedes-Benz GLB
- Nissan Kicks, Sentra and Versa
- Ram 1500, 2500/3500 Heavy Duty, 3500/4500/5500 Chassis Cab and ProMaster vans
- Toyota Tacoma
- Volkswagen Jetta, Taos, and Tiguan
Acura
Vehicles built in Canada
- Acura MDX
- Chevrolet Silverado HD
- Chrysler Pacifica
- Dodge Charger Daytona EV
- Honda Civic sedan and coupe, Civic Si, Civic HF, CR-V and CR-V Hybrid
- Lexus RX and RX Hybrid
- Toyota RAV4 and RAV4 Hybrid
Final thoughts
If you’re planning to buy a new car in the next few months, especially one built by our neighboring countries, you might want to consider buying one sooner rather than later, particularly if it might be subject to Trump’s tariffs.
There is, of course, the possibility that the tariffs might be delayed indefinitely if a satisfactory deal is reached with those countries, but we wouldn’t bet on that.