Auto prices set to rise due to the newly unveiled tariffs

Economists say Americans should brace for sticker shock if President Trump follows through on newly announced auto tariffs.

(CNN)- Economists say Americans should brace for sticker shock if President Trump follows through on newly announced auto tariffs. A proclamation signed yesterday imposes a 25% duty on imported assembled vehicles starting April 3rd, with tariffs on parts to follow by May 3rd. “If tariffs hold, you are going to see increases on automotive prices,” said Rana Foroohar, Associate Editor at the Financial Times.

Experts predict these tariffs could make some lower-cost imports too expensive to sell in the U.S. and drive up prices for American-made vehicles due to the added cost of imported parts. “Americans will keep their cars longer. They’ll have to. They won’t be able to afford them. They’ll also have a lot less choice,” said Mary Lovely, Senior Fellow at the Peterson Institute for International Economics.

However, the White House says parts that comply with the U.S.-Mexico-Canada Trade Agreement will get a temporary exemption to allow time for officials to set up a tariff system. The Anderson Economic Group estimates the cost to produce a vehicle in the U.S. could eventually rise by up to $12,000.

“It may fall in the first instance on the American manufacturer, who buys the input, who may then pass it on to the consumer, or it is passed through directly through the retail chain to the American consumer,” Lovely explained. Supporters argue the tariffs will benefit domestic manufacturers. The United Auto Workers union has endorsed Trump’s plan. “You’re going to see prices going down,” Trump said, adding that “business is coming back to the United States so that they don’t have to pay tariffs.”

In a recent survey, CFOs ranked tariffs as the top issue facing U.S. companies.