Wall Street, automotive boardrooms and dealership lots across the country are bracing for President Donald Trump’s 25% tariffs on car imports. Industry experts expect the tariffs, set to go into effect on April 2, will make every car more expensive regardless of where it was built or whether it’s new or used. However, the humble Toyota Corolla may be the affordable car model best suited to withstand a turbulent economic future
There are only 16 vehicle models sold in the United States with an average sticker price under $30,000, according to Reuters. Of those cars, the Toyota Corolla sedan is the only one assembled within the country’s borders. Corollas have rolled off the assembly line at Toyota’s plant in Blue Springs, Mississippi since the facility opened in 2011. The Japanese automaker stated on Monday that it has no intention of raising its prices when the tariffs come into effect. However, words are one thing and actions are another.
Car prices could soar across the board
The Corolla and other U.S.-built cars aren’t manufactured and sold in a vacuum. While Toyota promises not to raise prices, other automakers aren’t doing the same. Current estimates from Cox Automotive have a $3,000 price increase on domestically produced cars alongside a $6,000 price hike on foreign-built vehicles. This forecast also sees customers who typically gravitate towards new affordable cars looking to the used car market instead, increasing demand and raising used car prices.
To add even more uncertainty, the pending tariffs will also apply to car parts imported into the country. The trade tax would apply to defined key components, including “engines, transmissions, powertrain parts, and electrical components.” This would muddy the waters for domestic and foreign automakers. It’s a rarity that any model is wholly constructed in a single country, and the process of shifting an entire supply chain would be a lengthy, expensive process.
