How Are Tariffs Affecting Cars?

Issue 97

Hello!

Welcome to our new Saturday edition, where we bring you the most important news in an easy-to-read format and dive deeper into one hot topic in the automotive world. 

Market News

Toyota announced its new lineup and hinted at electrifying these two iconic models for the US

GM increased discounts for family and friends, but only for a certain type of vehicle. 

After closing this plan, VW clashes with UAW

This will be Mercedes Benz’s cheapest option. Notice anything different?

Recalls and Safety

The Ineos Grenadier might be versatile, but its doors aren’t the safest. Here’s why. 

90,000 Cadillac and Chevrolet models have been recalled for transmission issues. Here’s what you need to know. 

The IIHS has released the 48 safest cars for 2025. Here’s the list

Car Culture

Tesla owners are doing this in response to Musk’s antics

If you want a bit of old-school options, here are some excellent six-cylinder sedans for under $25,000

Again with the fake engine noises? This EV SUV is the latest to fall victim to the trend

This was the only “mass-produced” tri-turbo engine

Video of the week

Are you interested in collecting cars? Kern was. 

Here, he explains his 10 regrets about collecting cars!

IN THE KNOW

Tariffs are shaking up the automotive industry

Yes, it’s time we talked about tariffs, the topic that has taken over the news in the automotive sector. There’s no avoiding the topic, and it’s becoming more complex each day.

So, what exactly is going on? Every manufacturer is acting to shield itself from uncertainty as countries threaten each other with increasing tariffs.

The most impactful one is a 25% tariff on all steel and aluminum imports worldwide. These two materials are crucial in automotive production.

You can read more about the latest tariffs and trade partners affected in this article. 

The consequences of these tariffs aren’t only higher prices. Car manufacturing is a complex, interconnected process, with components from around the world.

A higher price is probably the least of our concerns. Global production could drop by 50% in a very short time, with some experts estimating a week. 

This raises the question of what automakers are doing to cope with a possible crisis. Firstly, as this article explains, it’s simply not possible to move entire factories to the US in less time than the tariffs will impact automakers. 

This reality doesn’t imply that automakers won’t move their operations. Honda is one automaker that has made a critical decision by moving the production of its second-best-selling vehicle in the US to American soil.

Even such a critical move is risky, as the increasing costs could price out the car. 

Another company rushing to take action is BMW.

Contrary to other European manufacturers, such as Volkswagen and Mercedes Benz, BMW has many German-made components, so much so that the company can’t truly bypass the incoming tariffs.

So, as this article explains, it will resort to creative actions, but these are only temporary. 

Even Ford, an American automotive staple, is scrambling to protect itself from an industry shakeup unlike any other.

Despite the overwhelming uncertainty, the American company is stockpiling supplies and begging providers to keep working.  

The situation has gotten so crazy that Tesla, out of all companies, has issued warnings that this could truly ignite a trade war (as if there isn’t one already).

The company also warned that some components might be impossible to find in the US. Here’s more on this topic. 

So, how does this affect us, the consumers?

Can we reduce the consequences of more expensive cars? Yes and no. 

The logical consequence, which we will certainly feel soon, is that cars will be pricier. As this article explains, we might return to the crazy pandemic times when speculation ran rampant. 

We might not quantify how many cars will be affected.

After all, what do the Chevy Silverado, Ford Maverick, Audi Q5, BMW 3-series, and Ram 1500 have in common?

They’re not entirely produced in the US, and that’s only part of the list we have brought for you here.  

Then, there are the spares. It’s not only about buying your vehicle; any repair could be impossible to solve.

So, it’s not only the undesired consequence of people rushing to buy cars; it’s about considering every possible aspect of car ownership with your new vehicles.

It’s bewildering that this has only just begun. At FWT, we don’t believe it will escalate to catastrophic levels where cars are unpurchasable, but our wallets will feel the impact sooner rather than later. 

We’d love to hear your thoughts: what do you think will happen? Reply with an email and we could feature your comment in upcoming issues!

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