U.S. auto industry warns new auto parts tariffs will hike prices, cut sales

A coalition of U.S. auto industry groups urged President Donald Trump on Tuesday not to impose 25 per cent tariffs on imported auto parts, warning they would cut vehicle sales and raise prices.

Trump said earlier he plans to impose tariffs of 25 per cent on auto parts no later than May 3.

"Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable," said the letter.

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The letter from the groups representing General Motors, Toyota Motor, Volkswagen, Hyundai and others, went to U.S. Trade Representative Jamieson Greer, Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent.

The government agencies did not immediately comment.

The letter was signed by the Alliance for Automotive Innovation, the trade group representing nearly all major automakers, the American Automotive Policy Council, representing the Detroit Three automakers, the National Automobile Dealers Association, as well as the Vehicle Suppliers Association, and others.

"Most auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy," the letter added, noting "it only takes the failure of one supplier to lead to a shutdown of an automaker's production line."

On April 14, Trump said he was considering a modification to the 25 per cent tariffs imposed on foreign auto and auto parts imports from Mexico, Canada and other places.

Trump said car companies "need a little bit of time because they're going to make 'em here."

Ford Motor said last week it may raise prices on its new vehicles if Trump's auto tariffs continue.

An analysis by the Center for Automotive Research published earlier this month found Trump's 25 per cent tariffs on automotive imports, implemented on April 3, will escalate costs for U.S. automakers by about $108 billion in 2025.