The White House says tariffs will not increase car prices, while automakers such as GM and Ford have expressed concerns.

The White House emphasized that the new tariff policy from the Trump administration won't increase car prices, but car manufacturers such as General Motors, Ford, Honda, and Toyota have voiced concerns over increasing costs and are adjusting their financial forecasts and production strategies to tackle potential impacts. Even though the White House is offering compensation and exemption measures, automakers still struggle to guarantee stable future prices. Estimates suggest that tariffs could raise the cost of each vehicle by $2,000 to $12,000, impacting market confidence and consumer behavior.

White House Stance: Domestic Incentives to Offset Tariff Impact

White House Deputy Chief of Staff Stephen Miller stated in a media interview in late April that President Trump's tariff policy won't make buying cars more expensive for American consumers. He noted, "Because now car manufacturers have strong economic incentives to expand production in the U.S., cars made in the U.S. won't face tariffs."

According to the new policy, car manufacturers that produce and sell complete vehicles within the U.S. can apply for tariff credits on imported components, with a credit equivalent to 3.75% of the car's suggested retail price in the first year, decreasing to 2.5% in the second year. Additionally, the White House has clearly stated that companies that have paid car tariffs will not be subject to additional tariffs on steel and aluminum.

Industry Response: Cost Pressure Remains, Price Trends Uncertain

Even though the White House is trying to reassure everyone, car manufacturers' responses show a reserved attitude towards the policy's effectiveness. General Motors (GM) CEO Mary Barra admitted that tariffs could cause the company losses of up to $5 billion and has revised its 2025 financial forecast downward. She stated that GM would mitigate the impact by increasing the use of local parts in the U.S. and expanding pickup truck production but did not commit to adjusting car prices.

Ford CEO Jim Farley explicitly stated in a CNN interview that he could not guarantee that car prices would not increase in the summer. He noted that Ford would extend the "Employee Pricing Promotion" until July 4 to maintain market competitiveness.

Toyota, although expecting to benefit from the tariff credit policy, does not plan to raise prices immediately, but a company spokesperson declined to comment further on future pricing strategies. According to UBS Securities estimates, Japan's top five car manufacturers could lose up to $25 billion annually due to U.S. tariffs, with Toyota being the most affected.

Honda has already moved the production of the Civic Hybrid from Japan to the U.S. to reduce tariff impact. The company's Vice President Shinji Aoyama pointed out as early as February that a 25% tariff would have a cost impact of up to $132.7 billion on Honda.

Tariff Cost Estimates: Up to $12,000 Increase Per Car

According to estimates by Michigan's Anderson Economic Group, even with some exemptions from the White House, car manufacturers will still face tariff costs ranging from $2,000 to $12,000 per car. If the car is assembled in the U.S., the tariff impact is about $2,000 to $3,000; for imported complete cars, it could be as high as $10,000 to $12,000.

For example, the tariff cost for each Ford Explorer assembled in Chicago is $2,400, lower than the pre-exemption $4,300, but still a significant burden. Stellantis' Jeep, Ram, and Chrysler models face tariff pressures of $4,000 to $8,000 per car.

Production and Supply Chain Adjustments: Varied Strategies Among Manufacturers

With the policy changes, car manufacturers are adjusting their production and supply chain strategies. General Motors stated it would increase the number of battery modules produced in the U.S. and work with suppliers to increase the proportion of parts that meet the USMCA regulations. Ford and Stellantis have chosen to extend promotional activities to stabilize sales.

Honda and Toyota are accelerating the transfer of some model production to the U.S. Japanese car manufacturers like Nissan and Mazda are also reevaluating their supply chain layouts, with some manufacturers like Audi and Jaguar Land Rover even suspending exports to the U.S. to clear inventory and observe policy trends.

International Reaction and Negotiation Stalemate

Major U.S. trade partners are unhappy with the tariff policy. The Japanese government strongly opposed the U.S.'s proposed framework of "not reducing car and steel-aluminum tariffs" during the second round of negotiations and demanded a comprehensive discussion. Japanese Prime Minister Shigeru Ishiba is expected to meet with Trump during the G7 summit in June to seek more favorable conditions.

Meanwhile, European car manufacturers like Mercedes and BMW have revised their financial forecasts downward due to policy uncertainty and delayed their 2025 financial guidance. South Korea and China continue to negotiate with the U.S., seeking exemptions or delays in tariff implementation.

Market Reaction: Consumers and Dealers on Hold

Even though the White House insists tariffs won't raise car prices, market reactions show that consumer confidence is still affected. According to a Pew Research Center survey, the Trump administration's approval rating continues to decline among moderate voters. Dealers report that more consumers are purchasing cars in advance to avoid future price increases.

In Taiwan, April's car market registration numbers decreased by 11% year-on-year, with industry insiders citing U.S. tariff policies and global economic uncertainty as major reasons. Hotai Motor predicts that the market will remain sluggish in May, indicating the ripple effect of international policies on regional markets.

The White House says tariffs will not increase car prices, while automakers such as GM and Ford have expressed concerns.

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