The new US tariff policy will significantly increase new car prices by April 2025.

Taiwan • Business • 05/12 21:30
The new US tariff policy will significantly increase new car prices by April 2025.

In April 2025, new car prices in the United States increased due to a 25% import tariff, with the average transaction price rising by 2.5% compared to March, making it the second highest for the same period in nearly a decade. The tariff has affected imported vehicles from multiple countries, driven by consumer expectations and supply chain pressures. Some manufacturers, such as Ford, have already increased prices on models made in Mexico. Automakers like Nissan and Toyota are adjusting their production strategies to deal with the tariff impact. The UK has obtained lower tariff treatment, while countries such as Japan are facing negotiation challenges. Prices are likely to rise further in the coming months.

Key Updates

05/13 10:26

The temporary reduction of tariffs between the US and China has boosted exports, resulting in an 88.88% increase in Wan Hai Lines' profit in the first quarter of 2025 and the expansion of its routes.

On May 13, 2025, the US and China reached a 90-day tariff agreement in Geneva, reducing US tariffs on imports from China to 30% and Chinese tariffs on imports from the US to 10%. This move offers a short-term boost for Chinese exporters. Wan Hai Shipping announced its financial report for the first quarter of 2025, with net profit after tax increased by 88.88% compared to the previous year, and freight rates on Asian routes increased by over 30%. In response to growing demand for cargo space, Wan Hai is expanding its shipping routes and initiating new shipbuilding plans to boost capacity and competitiveness.

05/13 08:57

90-Day U.S. Tariff Suspension Triggers Buying Frenzy: Experts Advise Stockpiling Five Key Categories of Imported Foods

In early May 2025, the U.S. government announced a 90-day suspension of tariffs on imports from multiple countries, serving as a buffer period for negotiations with trade partners. This move sparked a buying frenzy in major cities across the U.S., as consumers feared price hikes once the tariff period ended, leading them to stockpile food and daily necessities. Experts recommended stockpiling grains, coffee, wine, cheese, and cooking oil, since these goods are highly dependent on imports and face significant tariff increases. The market reacted cautiously, with businesses taking a wait-and-see approach during the suspension period, while some accelerated shipments to reduce future tax risks.

05/13 06:59

Due to the new US tariff policy, Samsung is increasing DRAM prices: DDR4 by 20% and DDR5 by 5%. Companies are stocking up in advance, boosting demand.

In May 2025, Samsung Electronics agreed with major clients to raise DRAM prices due to new upcoming US tariff policies, with DDR4 increasing by 20% and DDR5 by 5%. This move was driven by companies stocking up in advance, which increased demand. SK Hynix and Micron also adjusted their prices simultaneously, indicating supply chain and policy pressures in the DRAM market. These adjustments reflect changes in market demand and suppliers' strategic responses.

05/12 21:54

Customs duty revenue in the United States reached a record high of $16 billion in April 2025, easing the pressure on the budget deficit.

In April 2025, the U.S. federal government's customs revenue reached $16 billion, a 130% increase from the same period last year, setting a new monthly high for the past decade. This growth was primarily driven by the Trump administration's 'across-the-board 10% tariff' and significant punitive tariffs on China. This revenue boosted the April budget surplus to $258.4 billion, a 23% increase from the previous year, partially easing the budget deficit pressure.

05/12 21:30

In April, the U.S. budget surplus grew by 23% to $258 billion, as customs revenue hit a record high.

The U.S. Department of the Treasury released data on May 12, 2025, indicating that the federal government's budget surplus for April 2025 was $258 billion, a 23% increase from the same period last year. This growth was primarily driven by a surge in tax revenue and customs duties before the close of the tax season. Customs revenue in April was $16 billion, marking a record high, and was linked to the high tariff policies the U.S. imposed on China and other countries.

05/12 21:30

The new US tariff policy will significantly increase new car prices by April 2025.

In April 2025, new car prices in the United States increased due to a 25% import tariff, with the average transaction price rising by 2.5% compared to March, making it the second highest for the same period in nearly a decade. The tariff has affected imported vehicles from multiple countries, driven by consumer expectations and supply chain pressures. Some manufacturers, such as Ford, have already increased prices on models made in Mexico. Automakers like Nissan and Toyota are adjusting their production strategies to deal with the tariff impact. The UK has obtained lower tariff treatment, while countries such as Japan are facing negotiation challenges. Prices are likely to rise further in the coming months.

05/12 18:56

US-China Tariff Deal Sparks Market Rally: Tesla's Valuation Hits $1 Trillion Again, Foreign Investment Pours into Asian Stocks

On May 12, 2025, the US and China reached a tariff agreement in Geneva, suspending certain punitive tariffs for 90 days to alleviate the trade war. This action triggered a global market response, causing Tesla's stock price to soar and its market value to return to $1 trillion. Foreign capital flowed back into emerging Asian markets, resulting in a net purchase of $4.21 billion within a single week. The Taiwan stock market attracted $2.74 billion, hitting a new high for 2025, while Vietnam's VN-Index rose by 3.3%. Reports analyzed the market impact of this reduction in trade tensions.

05/12 14:57

US-China Tariff Deal Triggers Market Rally: Dow Jumps 1,000 Points, Tech and Luxury Goods Stocks Lead Gains

On May 12, 2025, the United States and China reached an agreement in Geneva, with both parties agreeing to reduce tariffs on each other's goods by 115 percentage points within the next 90 days. U.S. tariffs on Chinese goods will decrease from 145% to 30%, while Chinese tariffs on U.S. goods will drop from 125% to 10%. This move signifies a cooling down of the trade war, leading to a strong reaction in global financial markets. The three major U.S. stock indices increased, with the Dow Jones Industrial Average surging over 1,000 points. Technology and luxury goods stocks led the gains, oil prices increased, and safe-haven assets such as gold and the yen fell.

05/12 12:25

Toyota Faces Pressure from U.S. Tariffs: Strategic Decisions Between Local Production and the Japanese Supply Chain

Starting in 2024, the United States will impose a 25% tariff on imported cars, causing a major impact on Toyota. On May 8, 2025, Toyota President Koji Sato stated that the tariff had already led to a $1.3 billion loss within just two months. Toyota is faced with the choice between maintaining its supply chain in Japan and accelerating overseas production. This decision affects 60,000 small and medium-sized enterprises in Japan. Although Toyota already has 11 factories in the U.S., their capacity is nearly saturated, making it challenging to completely transition to local production. Toyota is considering diversifying its export markets to cope with the uncertainty in the U.S. market.

05/12 10:59

The White House is speeding up efforts on 24 trade agreements, and the grace period for Trump's reciprocal tariffs is set to expire in early July.

The 90-day grace period for President Trump's "reciprocal tariff" policy will expire in early July, and the White House is accelerating the push for negotiations on 24 trade agreements. White House National Economic Council Chairman Hassett stated that many of these agreements are modeled after the US-UK agreements and have reached the final stages of negotiation. Countries are striving to complete negotiations before the end of the grace period to avoid high tariffs. Trump has personally intervened in the negotiations, and the timeline for announcing the agreements is closely aligned with the tariff policy deadline.

Background on Tariff Policy: 25% Import Tax Fully Implemented

Starting April 3rd, 2025, the United States will impose a 25% tariff on imported vehicles from several trade partner countries, extending to most auto parts by May 3rd. This policy, led by former President Trump, aims to reduce the trade deficit and promote domestic manufacturing. Although some countries like the UK have received special treatment, enjoying an annual quota of 100,000 vehicles with a reduced tariff rate of 10%, most countries, including Japan, Mexico, and Canada, still face full tariff pressure.

According to Business Weekly, the Trump administration emphasized that British cars like Rolls-Royce and Bentley are part of a high-end niche market with no direct competition with American domestic brands, thus receiving exceptional treatment. In contrast, the trade deficit between Japan and the US stands at $68.5 billion, with significant disagreements on automotive and agricultural issues, leading to slow negotiation progress.

Price Data: New and Used Car Prices Rise Simultaneously

According to data from Kelley Blue Book under Cox Automotive, the average transaction price of new cars in the US rose by 2.5% in April 2025 after discounts and promotions, significantly higher than the average 1.1% increase during the same period in previous years. This is one of the largest monthly increases since the factory shutdowns caused by the pandemic in 2020.

Meanwhile, the Manheim Used Vehicle Value Index by Cox shows that US wholesale used car prices increased by 4.9% year-over-year and 2.7% month-over-month in April, reflecting that the overall pressure on car market prices is spreading to the used market.

Cox Chief Economist Jonathan Smoke pointed out that the current nationwide dealer inventory has dropped below 2.6 million vehicles, and tight supply may further drive up prices in the coming months.

Consumer Behavior and Dealer Response

Although some automakers have not fully raised suggested retail prices, consumer expectations of future price increases have led to an early surge in car purchase demand. Cox Executive Analyst Erin Keating stated that even if automakers maintain prices, consumer buying behavior and dealer-level pricing strategies still lead to price increases for some models.

For example, Ford has notified dealers of price increases of up to $2,000 for its Mexico-made models, including the Mustang Mach-E electric SUV, Maverick pickup, and Bronco Sport, which are directly affected by the 25% tariff.

Todd Szott, a partner at Szott Automotive Group in Michigan, noted that although overall prices remain stable, the proportion of promotions and discounts has dropped to the lowest level since the summer of 2024, indicating that manufacturers are gradually tightening their pricing strategies.

Automaker Strategy Adjustments and Supply Chain Changes

Facing the new tariff environment, several automakers have begun adjusting their global production and supply chain layouts. Nissan has temporarily halted exports of SUVs from Mexico to the US and is reassessing its North American production capacity. Toyota stated it will maintain its current US production scale and focus on reducing fixed costs while closely monitoring further developments in US tariff policy.

According to Yahoo Finance, Japanese government officials revealed that an unnamed Japanese automaker is losing approximately $1 million per hour due to the tariffs. Toyota estimates that if calculated at 730 hours per month, the tariffs will cause a loss of $1.2 billion.

Additionally, in response to pressure from the US market, Honda has shifted production of the Civic hybrid from Japan to the US, while Mazda has stopped exporting models produced at its Alabama plant to Canada due to retaliatory tariffs.

UK-US Agreement and Treatment Differences for Other Countries

Unlike most countries, the UK has received more lenient treatment in its bilateral trade agreement with the US. According to the agreement, the US will reduce the import tariff on UK cars from 27.5% to 10% and set an annual duty-free quota of 100,000 vehicles. Mike Hawes, President of the Society of Motor Manufacturers and Traders (SMMT), stated that this agreement provides long-term stable export prospects for the UK automotive industry.

However, Trump explicitly stated that the same treatment would not be offered to other countries, emphasizing that UK models are "very limited ultra-luxury cars" with no direct competition with US manufacturers. This makes it difficult for major exporting countries like Japan to emulate the UK model, limiting negotiation space.

Market Supply and Demand and Future Price Trends

Although some automakers maintain price stability through promotional activities, the overall market supply-demand imbalance has started to put pressure on prices. Cox pointed out that if supply continues to tighten, prices may rise further in the coming months. According to its estimates, new car prices directly affected by the 25% tariff may increase by 10% to 15%, while models not fully affected may also rise by 5%.

Paul Zimmermann, a partner at Matick Automotive Group, stated that although current inventory remains healthy, if importers further cut deliveries, the supply chain may hit a "breaking point."

References

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