U.S. Tariff Disputes Elevate 'Made in America' Label Beyond Merely Symbolic
In the automotive world, the 2022 American-Made Index, as presented by Cars.com, has highlighted some intriguing findings. The list includes a mix of popular models such as the Tesla Model Y, Honda Passport, and Volkswagen ID.4, all of which are manufactured at the Chattanooga plant in Tennessee. These vehicles score highly due to a significant percentage of their parts and assembly originating in the U.S. and Canada.
However, the landscape of car manufacturing has been significantly influenced by the tariffs imposed by former President Donald Trump. Key tariff details include a 25% levy on imported passenger vehicles and light trucks, foreign-made auto parts, and vehicles imported under the US-Mexico-Canada Agreement, with the value of content not made in the U.S. being taxed. Additionally, a 50% tariff was imposed on imported steel and aluminum, affecting material costs.
These tariffs have increased production costs, which may be passed on to consumers in the form of higher vehicle prices. Studies suggest that North American-built car prices could rise by $2,500 to $4,000 for budget models and up to $10,000 to $15,000 for pricier cars and electric vehicles.
The situation is particularly challenging for vehicles that are built with parts sourced from Canada and Mexico, as tariffs contradict the US-Mexico-Canada Agreement terms, causing uncertainty and cost pressures throughout the supply chain.
Despite these challenges, dealers can help their customers by being transparent about the reasons for price increases due to tariffs. It's also worth noting that the Cars.com American-Made Index only considers auto factory jobs and does not give extra credit for employing people at U.S. design and R&D centers.
In a positive development, Hyundai recently opened a major manufacturing facility in Georgia, which could prove beneficial given the current tariff situation. The index ranks current-year vehicles that contribute significantly to the U.S. economy and takes into account criteria such as U.S. factory jobs, manufacturing locations, and parts sourcing.
As we look towards 2025, the year of the tariffs ordered by President Donald Trump, the impact on the automotive industry becomes even more pronounced. Tariffs are predicted to push car prices up most for people who are least likely to afford them, putting many affected dealers in a difficult position, needing to increase sales volumes to make a profit.
The index evaluates more than 400 vehicles, considering various factors, but it's important to note that it does not focus on the country of origin for parts like door handles, tires, and interior materials. Price-conscious car consumers are advised to buy now if they are in the market, as waiting may result in paying more due to tariffs.
In the top 10 of the index, the Jeep Gladiator pickup truck is the only other American nameplate, with the Tesla Model 3 taking the top spot in Cars.com's 2025 American-Made Index. The Tesla Model Y, Model S, and Model X follow closely behind. The most affordable vehicles are expected to experience the largest price increases due to tariffs.
Sources:
- Cars.com 2024 American Made Index summary
- NerdWallet on Trump's auto tariffs
- Cars.com on tariff effects on auto industry
- Despite these challenges, it's crucial for consumers in the market for a new car to buy now if they want to avoid potential price increases due to tariffs, as the most affordable vehicles are expected to experience the largest price hikes.
- Meanwhile, the Jeep Gladiator pickup truck is the only American nameplate in the top 10 of the American-Made Index, with Tesla models taking four out of the top five spots, indicating a significant shift in the automotive industry towards electric vehicles.
