US President elect Trump has threatened to impose tariffs on countries such as Mexico, which will make it more difficult for American consumers to buy affordable cars.
According to analysis by the car shopping website Edmunds, nearly one-third of the cars currently sold in the United States for less than $30000 are produced in Mexico, including the Nissan Sentra, Ford Maverick, and other popular models. Ten years ago, only one-fifth of the economy cars sold in the United States were made in Mexico.
On November 25th, Trump announced that he would impose a 25% tariff on goods from Mexico and Canada on his first day in office.
Analysts and dealers say that any new tariff related costs could be passed on to consumers, at least in the short term, and the most impacted will be those most affordable cars and SUVs.
Some lower priced car models are manufactured in Canada, such as the Honda Civic, and car parts manufactured in both Canada and Mexico will also be subject to new trade tariffs, which will further increase costs for manufacturers and consumers.
According to Wolfe Research, Trump's tariff plan may increase the average cost of each car sold in the United States by about $3000.
Some car manufacturers and dealers have expressed their hope that Trump's tariff threat is just a negotiation strategy, with many companies adopting a wait-and-see attitude.
I think this is part of the negotiation process aimed at achieving goals, "General Motors CEO Mary Barra said at an event in December. Obviously, we will provide opinions behind the scenes
General Motors has three major assembly plants in Mexico, and about one-third of the cars sold in the United States are produced in Mexico.
However, some car companies are also starting to weigh other options.
Mazda's North American business leader Tom Donnelly said that if the United States implements new tariffs, the company may consider producing more cars in Alabama or importing these vehicles from Japan.
Mazda produces its compact sedan Mazda 3 and small SUV CX-30 in Mexico, and operates a joint factory with Toyota in Alabama, USA.
He added that these measures may not fully offset the impact of the US tariffs on Mexican imports. 30% of Mazda's cars sold in the United States are produced in Mexico.