There have always been various tariffs on goods imported into any country, but recent actions by the American President call for new tariffs.

These new tariffs are sweeping and could be extremely detrimental to the American people in ways that we haven’t seen for more than 100 years. Currently, a 10% tariff on goods coming from China and a 25% tariff on goods from Mexico and Canada are being considered. These are three of the closest trade partners to the United States, which means everything coming from these countries will be more expensive.

Who pays for the tariff?

The current American President continually claims that imposing tariffs on products from these three countries won’t cost the American people anything. Instead, he claims they will add money to the federal government and boost domestic product competition. In theory, he is correct, but that’s not the whole story.

Have you ever heard of a company taking on all of the costs of products without passing those costs onto the consumer? Many large companies in America have reported record profits in recent years and won’t reduce their profits at the cost of government-imposed tariffs. Instead, the price of everything imported from these countries will immediately increase.

In fact, there have been reports of increased prices in some companies in anticipation of these tariffs, as well as some companies purchasing months of inventory ahead of the tariffs for the same reason. This hit home with one company in Pennsylvania before the holidays because the company withheld holiday bonuses in order to buy inventory.

These tariffs are paid for by the consumer, and talking about them or suggesting them as a strategy has already proven detrimental to some workers.

How can these new tariffs impact car prices?

Imported vehicles

Cars are made of thousands of parts and components, not all of which are made domestically. Some vehicles that are sold in America are made in other countries, including Canada, Mexico, and China. Yes, some Chinese-made vehicles are sold here. In fact, the Buick Envision, which wears an American brand name, was the first vehicle made in China and imported into the United States. Imagine how expensive entire vehicles built in these countries will be if the tariffs are imposed on them.

Domestically built vehicles

Vehicles that are built in America might not see as heavy a price increase due to the new tariffs as those imported from other countries, but there will be increased prices. Expect the current administration to attempt to blame increased prices on inflation, but that won’t be the case. Most vehicles are built with parts that come from China, Mexico, and Canada, which means these components will be more expensive than before, and that cost will be passed onto the consumer.

Some supplies might shut down

Suppliers of smaller components, such as airbags, seat belts, or wire harnesses, might not be able to shoulder the extra 25% costs on the parts they sell to car companies for assembly in the United States. Autoliv, a global supplier of safety equipment, has already announced it cannot afford to take on the costs of the tariffs. This company is based in Sweden but has facilities in Canada, Mexico, and China, which are the main targets of these new tariffs.

Examples of the mess

Additional tariffs that have been suggested will certainly make a mess of things, which might not be repairable. Looking at a couple of examples of how vehicles are built and where things come from, we’ll turn to U.S. News and World Report, which offers:

“The Buick Enclave contains parts and materials made in the U.S., Canada, and Mexico. Its engine is manufactured in Mexico, and its transmission is made in the U.S. The Enclave’s final assembly is stateside, but GM will pay a 25% tariff on the engine and any foreign parts used in that final assembly.

The Honda Civic sedan uses parts from the U.S. and Canada. Its engine is built in the U.S., and its transmission is built in Mexico. However, its final assembly is in Canada. That is a complex mix of tariffs on a variety of imported parts as well as the final imported vehicle.”

Consumers will pay the price

Despite flowery language or empty assurances that there won’t be much of disruption due to these new tariffs, the simple fact is that consumers will pay for these additional costs. Will the money collected be used to benefit the American people as a whole? Will it offset some of the many taxes we already pay? That’s to be seen, but the bottom line is that when tariffs are imposed, the general public shoulders the cost which means more expensive cars.