Donald Trump's 25 Percent Tariffs Could Kill Off The Cheap Car

Yahoo

28-03-2025

Good morning! It's Friday, March 28, 2025, and this is The Morning Shift: Your daily roundup of the top automotive headlines from around the world, all in one place. This is where you'll find the most important stories that are shaping the way Americans drive and get around.
In this morning's edition, we're looking at which cars Donald Trump's new 25 percent import tariffs will hit hardest and hear about the threats made against automakers if they raise prices. Plus, find out which cars are included in a probe of 2 million vehicles launched by the NHTSA, and Kia outlines its plans to build hybrids in America.
Read more: Judge Takes Away Man's Dodge Charger Hellcat After He Acted Like A Hellcat Owner
After weeks of will they, won't they, president Donald Trump confirmed that a 25 percent tariff is coming for imported cars sold in America. The fee will take effect from April 2 and will hit full cars and car parts shipped into the U.S. from overseas.
The full impact of the tariffs remains to be seen, but experts are warning that the fallout could hit cheaper cars much more severely, reports Bloomberg. Finding a cheap car is already a tough task, with average prices in America edging ever closer to $50,000. Picking a bargain could now get much harder with sub-$30,000 cars likely to feel the brunt of Trump's tariffs for several reasons:
"It's going to be a real struggle for those buyers," said Erin Keating, executive analyst at researcher Cox Automotive. "We only expect prices to rise and incentives will go away. Some vehicles could go away."
The tariffs could disproportionately hit cheaper cars because many of the most affordable models sold here simply aren't made here. The least expensive offerings from General Motors, Ford, Kia and Hyundai are assembled outside the U.S. at plants in Canada and Mexico, which will fall foul to the new fees.
The cost of these budget-friendly models made outside the U.S. could be set to rise by as much as $5,855 on average, Bloomberg adds, which could mean the difference between buying a new car and not for some shoppers. It's for this reason that Stellantis chairman John Elkann warned that the "affordability of our products" and the current "uncertainty" in the U.S. could hit demand across the country.
All this talk of increased car prices in the Land of the Free might make you question why Trump proposed the tariffs in the first place, as he's all about improving the life of normal Americans, right? This wasn't the goal of the tariffs, and Trump reportedly threatened automakers who said the new fees would result in an increase in prices for their cars.
During a call with some of the country's top automotive CEO's, the "Home Alone 2" actor reportedly said "the White House would look unfavorably" on price hikes off the back of the tariffs, according to the Wall Street Journal. The call left some execs "worried they would face punishment" should prices rise, the WSJ adds:
Instead, Trump said, they should be grateful for his elimination of what he called former President Joe Biden's electric-vehicle mandate, which involved subsidies and emissions requirements to encourage electric-car production. He made a lengthy pitch for how they would actually benefit from tariffs, two people on the call said, adding that he was bringing manufacturing back to the U.S. and was better for their industry than previous presidents.
During an event to confirm that the 25 percent tariffs would come into effect from April 2, Trump claimed the new taxes would, in fact, lower prices for American car shoppers. Trump claimed the move will incentivize companies to plow millions of dollars into American manufacturing so that they can build their cars here and skirt the worst of the tariffs.
Sure, some companies have said they're considering expanding some of their manufacturing here in America, but as is the case with many cheaper cars, it's just not financially sustainable for automakers to build every car they sell in America on U.S. soil. As such, experts are warning that once stockpiles run low, prices of cars in the U.S. could rise by 10 to 12 percent in the coming months.
Right, enough tariff talk for one day, let's move on. Now, it's time to check in with the National Highway Traffic Safety Administration and find out what cars are broken this week, and it turns out that it's Honda's time on the naughty step. The Japanese automaker is facing a probe of more than 2 million cars over issues with its engines.
The NHTSA is probing restart issues that could impact 2.2 million Honda cars, reports Reuters. The issue is related to the stop-start function, which Honda calls Auto Idle Stop, as it fails to restart the engine at some intersections and traffic lights, as the site explains:
The NHTSA's Office of Defects Investigation has received complaints of AIS failure from consumers who have already implemented the countermeasures. The engineering analysis will consider potential safety defects along with collecting additional data regarding Honda's countermeasure service campaign.
The Office of Defects received more than 1,300 complaints relating to issues with the stop-start system, and even heard of four incidents that resulted in crashes or fires and two that led to injuries.
The probe will impact a whole host of Honda and Acura models, NHTSA explained in a release. It will hit the 2016-2019 Honda Pilot, 2019-2022 Honda Passport and 2020-2023 Honda Ridgeline, as well as the 2015-2020 Acura TLX and 2016-2020 Acura MDX.
Automakers have spent the past few years plowing millions of dollars into their electric vehicle manufacturing plants across the U.S. The investment included the commitment from Hyundai and Kia that the two Korean brands would build a new Georgia plant with the aim of increasing EV capacity.
Now, after EV sales failed to match projections and many shoppers looked to hybrid power instead, Kia and Hyundai confirmed that it will bring production of new hybrid cars to the new Georgia plant as well, reports Reuters:
But in a shift in strategy, Hyundai now plans to add hybrid cars to the factory's production lines at a time when demand for pure electric cars is cooling and President Donald Trump's administration is threatening to end EV subsidies. Kia vehicles will represent 40% of the Georgia facility's total production, Kia CEO Song Ho-sung told reporters on the sidelines of an opening ceremony for the factory on Wednesday.
At the same time, the two automakers announced that total capacity at the site is set to expand from 300,000 vehicles annually to 500,000, Reuters adds. The move will bring Hyundai and Kia's combined U.S. production capacity to 1.2 million vehicles per year, up from the 850,000 cars that the two currently build in the U.S. every year.
If you think about your favorite song of all time, is it one that's changed over the years or something that's stuck with you through thick and thin? I think mine's changed a bit over time, while remaining similar.
Artists like Arcade Fire, David Bowie and The Killers have all claimed the crown at some point, but today I'm back in love with the song that's probably held the title for the longest. It's the final track on the Arctic Monkeys' second album and, for a band that consistently puts their best tracks at the end of every record, this one really is a doozy.
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