The automotive industry’s operative word beginning in 2025 is “tariffs,” which Oxford describes as “a tax or duty to be paid on a particular class of imports or exports.” The Trump administration made it household word when the president instituted tariffs on nearly every product entering the country, including automobiles.
We can argue the merits of tariffs, but one thing cannot be contended – most likely you will pay more for your next vehicle purchase aside from the usual inflationary cost increases.
Vehicle Prices
On the flip side, not every vehicle is directly affected by tariffs, as some models are built in the United States. However, many still rely on imported parts such as engines, transmissions, and electrical components, which remain subject to tariffs.
At the same time, there are exceptions—parts sourced from Canada or Mexico are not tariffed under USMCA rules. Even so, it places consumers in a tricky position, one that requires careful research before making their next purchase.
Made in America…or Not
Creating a list of vehicles affected is no easy task, but there are some models that are clearly tariffed. For instance, if you purchase a Volvo, tariffs run from 0 to 100 percent, depending on where it is built. Specifically, the Volvo S60 sedan and the EX90 SUV avoid tariffs because they are built domestically in Ridgeville, South Carolina.
On the other hand, the Volvo XC60, XC90, and EX/EC40 models face a 27.5 percent tariff since they are assembled in Europe. That does not mean your costs will rise by the same amount, as manufacturers decide how much of the increase to pass along. Volvo could absorb the full tariff or cover part of it, leaving buyers to shoulder the rest.
The news gets worse for other models. Indeed, if your Volvo is built in China, then a 100 percent tariff applies. The S90 and ES90 sedans are affected as are certain PHEV models. Volvo may quit selling models affected by the very high tariffs, therefore limiting what American consumers can purchase.
Mazda Models…and Toyota
Volvo, of course, isn’t the only foreign brand affected. For example, Mazda builds nearly every model in Japan. As of this writing, they claim that their inventory is comprised of vehicles already in the U.S., therefore tariffs do not apply. But on future deliveries, a 25 percent tariff applies (potentially falling to 15 percent if the US and Japan agree to further conditions). It is up to Mazda to determine how much of the tariff they will pass on to consumers.
Toyota is in a somewhat different position as most of their models (outside of Lexus) are built in the United States. However, tariffs do apply to parts built outside of the US, Canada, and Mexico. This means most models will be affected. At present, Toyota is showing little inclination to pass along these costs to consumers, choosing to absorb losses. At least for now.
The Entire Market
Not all tariff rates currently in place will stand. Some will change, especially as the US and the tariff country agree on new rates. For now, though, here are the tariff amounts for vehicles built in Korea, Europe, and elsewhere:
All foreign imports — 25 percent Applies across the board to passenger vehicles, light trucks, and parts.
EU 27.5 percent (soon 15 percent if deal passes) — Europe-made vehicles—and negotiations ongoing.
Canada / Mexico 25 percent on non-USMCA content only — Tariff-free if compliance under USMCA.
South Korea 15 percent (effective August 1 via agreement) — Has not returned to full 25 percent.
United Kingdom 27.5 percent, potentially 10 percent (quotas apply) — Negotiations aim to cut rates for a limited number of vehicles.
Other Countries 25 percent — Standard unless other bilateral deals exist.
Tariffs Takeaways
Tariffs are here to stay, adding trillions of dollars to U.S. tax coffers. Manufacturers choose how much, if anything, to pass on to consumers. If you are shopping for a new car, use your knowledge to create leverage as you negotiate the out-the-door price for your next vehicle.
Image by Markus Winkler via Pexels.
