- The U.S. is imposing a 25% tariff on cars not made in the country, aiming to boost American manufacturing and generate $100 billion annually. Key parts made abroad will also face tariffs.
- Tesla and Rivian, which assemble 100% of their U.S.-sold vehicles domestically, are the least affected. However, Tesla CEO Elon Musk warns the company is not immune due to imported parts.
- Some foreign companies, like Hyundai, have already made plans to shift production to the U.S. to mitigate costs.
Full Story
The latest round of tariffs on automakers will hurt some more than others. Electric vehicle makers Tesla and Rivian are set to be impacted the least, but Tesla CEO Elon Musk warned his company will not come out unscathed.
“What we’re going to be doing is a 25% tariff on all cars that are not made in the United States. If they’re made in the United States, it’s absolutely no tariff,” President Donald Trump told reporters in the Oval Office on Wednesday, March 26.
The administration claims the tariffs will boost American manufacturing. The White House said it expects to raise $100 billion in annual revenue from the levies once they take effect in April 2025.
How Trump’s auto levies work
These latest duties will apply to vehicles imported into the country. For those assembled in the United States, the White House is putting tariffs on key parts manufactured elsewhere, like engines, transmissions and electric components.
“We’re going to have very strong policing,” Trump said. “And it’s pretty easy to do if parts are made in America and a car isn’t, those parts are not going to be taxed or tariffed. And we’ll have very strong policing as far as that’s concerned.”
Detroit’s Big Three automakers, Ford, General Motors and Stellantis, which manufactures Chrysler vehicles, saw their stock prices fall to open trading Thursday Morning.
Among the legacy American car makers, Ford will be affected the least, with 78% of its U.S.-sold vehicles assembled in the country. That’s according to data from Wards Automotive and Barclays compiled by Axios. Stellantis assembles 57% of its vehicles in the U.S. Meanwhile, GM assembles just over half (52%) of its vehicles in the U.S.
The data, which analyzes sales and assembly in 2024, found some foreign-owned brands assemble more of their U.S.-sold cars in the country than national brands.
Honda assembles 64% of its U.S.-bound vehicles in the U.S., which puts the Japanese brand between Ford and Stellantis. Subaru and Nissan slide in between Stellantis and GM at 56% and 53% respectively. Meanwhile, the world’s top-selling automaker, Toyota, assembles just under half of its American-sold vehicles in the U.S.
European brands will be subject to the most penalties. BMW, Mercedes, Volkswagen and Volvo all assemble less than 50% of their vehicles in the country.
Tesla comes out on top but Musk warns it’s not immune
EV-makers Rivian and Tesla appear to be least affected by the tariffs, assembling 100% of the cars sold in the U.S. on-shore.
Musk, who is a close ally to Trump, said his company will not avoid tariffs entirely.
“Important to note that Tesla is NOT unscathed here,” Musk said in a post to X. “The tariff impact on Tesla is still significant.”
To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial.
— Elon Musk (@elonmusk) March 27, 2025
“To be clear, this will affect the price of parts in Tesla cars that come from other countries,” he added later. “The cost impact is not trivial.”
The White House plans for the tariffs to take effect April 3. Estimates for how much it could drive up the cost of making vehicles are wide-ranging. However, it will be up to automakers to determine whether to pass on those costs to buyers.
Some brands already made plans to shift production to the U.S. South Korea’s Hyundai said it plans to invest $21 billion to expand manufacturing in the U.S. In 2024, the company made only a third of its U.S.-sold vehicles in the country.