Trump's tariffs are reducing car imports, idling factories

NEW YORK: President Donald Trump's 25% tariffs on imported vehicles, which went into effect last week, are already sending tremors through the auto industry, prompting companies to stop shipping cars to the United States, shut down factories in Canada and Mexico and lay off workers in Michigan and other states.

- JACK EWING

Jaguar Land Rover, based in Britain, said it would temporarily stop exports to its biggest market, the United States. Stellantis, which assembles vehicles in Canada and Mexico that make Chrysler and Jeep vehicles and laid off 900 US workers who supply those factories with engines and other parts. Audi, the luxury division of Volkswagen, has also stopped exports of cars to the United States from Europe, telling dealers to sell whatever they still had on their lots.

If other carmakers make similar moves, the economic impact could be severe, leading to higher car prices and widespread layoffs. The tariffs on cars are among the first of several industry-specific levies that Trump has in the sights and that offer early clues about how businesses will respond to his trade policies, including whether they raise prices or increase manufacturing in the United States. The president has said he also wants to tax the imports of medical devices and computer chips.

Applying the new tariff to imported cars could increase their cost to consumers by thousands of dollars, sharply reducing demand for those vehicles. For some Jaguar, Land Rover or Audi models, the tariffs can amount to more than $20,000 per car.

While much of the initial impact of the tariffs has been disruptive, at least some car transport duties had the intended effect of increasing production in the United States. General Motors said late last week that it would increase production of light trucks at a factory in Fort Wayne, Indiana.

The longer-term impact of the 25% tariffs is unclear. Many automakers are still trying to figure out how to avoid increasing prices so much that consumers can no longer afford new motors or pre-tax. Stellantis, Ford Motor, GM and Tesla have fallen in the past several days of trading.

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