American consumers are under "great pressure"! Trump's tariffs could cause car prices to skyrocket by $12,000.

The tariffs soon to be imposed on Canada and Mexico could raise US car prices by up to $12,000, further squeezing consumers and causing serious disruption to the car supply network. A new study from Michigan think tank Anderson Economic Group shows that the cost of manufacturing a crossover SUV will increase by at least $4,000, while the cost of manufacturing an electric car will triple that figure. The study found that these costs are likely to be passed on to consumers. Anderson Economic Group CEO Patrick Anderson said, "This cost increase will directlyalmost immediatelylead to a decline in sales of the types of cars most affected by trade." Imposing a 25% tariff on cars imported from Canada and Mexico could exacerbate the affordability crisis of cars, which has already forced buyers out of the market. Even before the tariffs are imposed, the average price of cars is already close to $50,000, up over 20% from five years ago. Concerns over the impact of import taxes have caused consumer confidence to drop to its lowest point in four years. After a one-month pause, US President Donald Trump announced last week that tariffs on major trading partners will come into effect on March 4th. Industry leaders have warned that these measures will severely damage industry sales, profits, and employment. These measures will also impact some of the industry's most well-known and top-selling models, such as the Chevrolet Silverado pickup truck and the Ford Bronco Sport SUV. According to sources, executives from General Motors Company, Ford Motor Company, and Stellantis spoke at a meeting held by the US Department of Commerce last week, warning of the terrible economic consequences of the proposed tariffs. Executives from Ford and Stellantis emphasized that the White House should focus on the millions of imported cars that do not contain US components. Anderson said, "Trump's tariff threats will have serious negative impacts on car sales." "Adding insult to injury" in the automotive industry Car sales have been declining as consumers struggle to deal with high prices and borrowing costs. Data released by the US government last week showed that January's inflation-adjusted consumer spending dropped by 0.5%, the largest monthly decline in nearly four years, due to a significant drop in car purchases. Dan Hearsch, head of the Americas automotive business at consulting firm AlixPartners, said that even if the price increase is not as significant as expected, US car sales could decline by 500,000 units. This is because car manufacturers will stop producing certain models in Canada and Mexico and shift as much production as possible to US factories. Hearsch said, "Some cars that cannot be produced in the US may not be produced temporarily." For example, Ford produces its popular Maverick compact pickup, Bronco Sport compact SUV, and Mustang Mach-e electric car only in Mexico. Ford CEO Jim Farley warned in February that a 25% tariff on Mexico and Canada "would have an unparalleled impact on US industry." General Motors Company produces full-size Chevrolet Silverado pickups in Mexico, Canada, and the US, while Stellantis produces Ram pickups in Mexico and the US. Anderson said these car manufacturers may shift some production to the US, but they may have to stop selling certain versions of trucks produced in Canada and Mexico. Anderson said, "You will see some models and trim levels disappear." Is there room for tariff reversal? Trump proposed tariffs on Canada and Mexico to prevent illegal immigration and the flow of illegal drugs into the US. This has sparked hope within the industry, as they believe that if US allies can make enough progress to satisfy Trump, the tariff measures will be temporary. Hearsch said, "The worst-case scenario is that these agreements will last for a few months, and the best-case scenario is that they will be continually delayed." He regularly consults with industry leaders. "This is not a trade action, it's border security negotiations." Meanwhile, car companies are stockpiling materials to mitigate the impact. Local union representative John D'Agnolo said Ford's engine plant in Windsor, Ontario, is accelerating the shipment of products across the US-Canada border to prepare for tariffs. Over the past month, the company has been looking for warehouse space in the US to store finished engines and parts. Hearsch said car manufacturers are also urging suppliers to build inventory and quickly move it to US warehouses, "so we can at least create a buffer." It is difficult to quantify the exact impact on car manufacturers' profits before the tariffs go into effect. However, considering the industry's difficulty in maintaining single-digit profit margins and losing billions on new electric car models, the potential blow is huge. Hearsch said that car industry executives are working to prepare for the upcoming tariff crisis, while long-term planning issues have been put on hold. Hearsch said, "This has everyone completely disoriented."