Automakers Scramble to Respond to Trump’s Tariff War

While the new trade sanctions are expected to add thousands to the cost of the typical new vehicle, even those assembled in the U.S., some manufacturers promise to hold the line on prices — for now.

On Friday, Hyundai launched a new “Customer Assurance” program that aims to soothe consumer fears about the potential impact of the new Trump tariffs on the price of its vehicles.

The Korean carmaker is just one of many automakers scrambling to find ways to minimize the impact of the tariffs announced by President Donald Trump on Wednesday. Industry analysts are forecasting significant price hikes — in some cases, topping $20,000 — on new vehicles sold in the U.S. as the tariffs take hold.

The auto industry could be particularly hard hit, observers warn, with most observers now downgrading forecasts for sales and earnings this year.

While Trump has promised his “Liberation Day” strategy will bring manufacturing back to the U.S., declining sales could actually result in lost American jobs, especially in the near term. Stellantis announced 900 tariff-related cuts in both Michigan and Indiana on Thursday.

Trump Warns Automakers

During his “Liberation Day” comments on Wednesday, Trump sounded upbeat on the impact of the automotive tariffs, declaring, “You’re going to see prices going down, but going to go down specifically because they’re going to buy what we’re doing, incentivizing companies to — and even countries — companies to come into America.”

But he was less upbeat when meeting last month with CEOs from a number of auto manufacturers, notably including General Motors’ Mary Barra and Ford’s Jim Farley. At the time, the Wall Street Journal later reported, he warned the executives not to pass on the cost of tariffs to their buyers.

Consumers Could Get Slammed

Edgar Faler, an industry analyst from the Center for Automotive Research in Ann Arbor, Mich., noted that even a few days after the new tariffs were announced, the exact impact and, indeed, the final details had yet to become clear. He told me that the cost should be “substantial.”

The complicated plan announced by the President varies by country, and further increases could even be seen based on whether trade partners try to retaliate. But there’s a broad consensus that new vehicle prices will, on average, rise by thousands of dollars. Michigan-based Anderson Economic Group anticipates the typical SUV will go up $4,000 on average and that higher-end vehicles could see increases above $12,000.

Import vehicles won’t be the only ones impacted, however. Stephanie Brinley, principal auto analyst at S&P Global Mobility, stressed to me that even U.S.-made models “will be impacted because they all use at least some imported parts.”

Automakers Try to Ease the Impact

U.S. consumers bought around 16 million vehicles in 2024, said Faler, noting that this would result in tariffs in the tens of billions of dollars if sales were to hold steady in 2025. However, there’s a broad consensus that many consumers would drop out of the market. The analyst said he could not see how it would be possible for automakers to simply absorb the tariffs despite Trump’s threats.

Not long-term, anyway, but some may try to forestall price hikes for now. Hyundai on Friday announced its Customer Assurance program. It ensures that American motorists who purchase one of its products between now and June 2, 2025, won’t have to pay more, no matter what happens with tariffs.

“At Hyundai, we have a long history of providing value and doing what’s right for our customers and communities,” said José Muñoz, president and CEO, Hyundai Motor Company.

“We know consumers are uncertain about the potential for rising prices, and we want to provide them with some stability in the coming months. Our MSRP commitment is just one part of our multifaceted effort to provide great vehicles to American consumers, while also supporting hundreds of thousands of jobs and investing billions of dollars in the most important market for our company.”

Ford announced its own program, dubbed “From America, For America,” earlier in the week. It will offer all customers the same pricing as its own employees. That may cut some costs, but even Ford employees will have to pay tariff markups.

VW Wants You to Know Why Prices Go Up

Volkswagen is taking a very different approach to the tariffs. It wants buyers to know why prices are going up and will have a separate line item on its Munroney label — the price sticker on the window of all new vehicles — breaking out the “import fee.” “We want to be very transparent about navigating through this time of uncertainty,” it told the Wall Street Journal.

Layoffs Begin

Analyst Faler and others said that the promise of new American manufacturing jobs has yet to be validated and would likely play out over the long term. It takes time to move even basic parts production back to the U.S. from abroad, and launching a new assembly plant could take years.

But they have warned that the country actually could experience a hit to automotive employment in the near term, and that’s already playing out.

In a letter sent to employees on Thursday, Stellantis said it will lay off 900 workers temporarily at five plants in Michigan and Indiana. Those facilities are being impacted because they produce parts and components used on one assembly line in Mexico and another in Canada, reported the Reuters news service.

In the letter, Antonio Filosa, Stellantis’ chief operating officer for the Americas, said the automaker is “continuing to assess the medium- and long-term effects of these tariffs on our operations, but also have decided to take some immediate actions.”

Other manufacturers I contacted declined to discuss their own plans, but several, speaking on background, indicated layoffs could be in their plans as they assess what tariffs might mean for future sales. A senior executive at a major importer noted that it may begin passing onto consumer tariff costs “within weeks.”

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