RM480 Bil Tariff Hit: US Auto Industry Caught in Crossfire

A recent report from the Center for Automotive Research warns that the 25% tariffs on automotive imports, introduced by President Donald Trump in early April, are set to drive up US automotive industry costs by an estimated US$108 billion (RM480 billion) in 2025.

The findings, published Thursday by the Michigan-based think tank, suggest that Ford, General Motors, and Stellantis - collectively known as Detroit’s Big Three - will shoulder a significant portion of that increase, with US$42 billion (RM186 billion) in added expenses.

For vehicles built in the U.S., the average tariff on imported parts comes to roughly US$4,900 (RM21,800) per unit, while the cost climbs to about US$8,600 (RM38,200) for fully imported models.

The tariffs, which went into effect on April 3, have disrupted supply chains across the sector. Although vehicles from Canada and Mexico are also subject to the levy, the U.S.-Mexico-Canada Agreement allows companies to offset some of the costs by counting U.S.-made content.

In response, manufacturers are beginning to reorganize their operations. GM has expanded truck production at a plant in Indiana, while Stellantis has paused output at factories in Mexico and Canada. These adjustments have created a ripple effect, influencing five additional facilities in the U.S.

The study found that Detroit automakers are seeing a higher per-vehicle cost increase than the rest of the industry - $4,911 (RM21,800) compared to the overall average of US$4,239 RM18,800) for parts. For imported vehicles, the average tariff impact is US$8,722 (RM38,700), with the Detroit Three just slightly below that at US$8,641 (RM38,400) per vehicle.

Given the scale of the impact, it’s no surprise that countries around the world are urgently seeking dialogue with the US government to renegotiate the newly announced tariff hikes. Malaysia, for instance, was hit with a 24% tariff but has since secured a 90-day suspension to allow time for negotiations.

China however, faces a steep 145% tariff - one that remains in effect, as Beijing has yet to enter talks and has instead responded with retaliatory tariffs of its own.