SOUTHFIELD, Mich. (WXYZ) — A major announcement came Wednesday for car manufacturers, as President Donald Trump signed a new executive order adding a 25% tariff on all cars assembled outside the United States.
The tariffs, set to go into effect on April 3, would impact nearly half of the cars sold in the U.S. The announcement has been met with mixed reaction, with the United Auto Workers expressing strong support, but some industry experts warning it could lead to higher prices and pain for auto companies.
"It’s quite a punch to the gut,” said George Glassman, president of Glassman Automotive Group in Southfield.
Glassman's dealerships sell Kia, Hyundai, Subaru and more.
"The manufacturers, it’s going to cost them more money, and there's no way I foresee them not passing those costs on to me and ultimately, the consumer,” Glassman said.
While many of the models Glassman sells are actually assembled in the U.S., he fears prices across the board could increase.
“Overall, this would result in probably, let's say a 5%, 10%, 15% increase in the price of vehicles on average," said David Kudla, CEO and chief investment strategist at Mainstay Capital Management in Troy. "Most of the cars sold in America by the Big 3 are made here in America, but there are some that have final assembly in Mexico, some have final assembly in Canada and are shipped here for sale. That will be the rub.”
Xamaka LaTham of Southfield says he just bought his brand new F-150 four weeks ago because he was worried looming tariffs would cause the price to rise.
“I've been thinking about it for a while, but then with the impending thoughts of tariffs going up and me working in the industry, figured it was a good time to do it,” LaTham said. "Just knowing that tariffs went into effect and it’s real now, I know it’s something I don't have to think about anymore.”
UAW President Shawn Fain applauded Trump and says the president "made history" by enacting the tariffs.
"These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and it is now on the automakers, from the big three to Volkswagen and beyond, to bring back good union jobs to the U.S.," Fain said in a statement.
Related video: Trump anonunces 25% tariffs on foreign-made autos in bid to increase vehicle manufacturing in the U.S.
“There’s no question that having plants built in the United States is very productive. It's a lofty goal and it's a good goal," Glassman said. "But I'm not so sure there isn’t possibly another way.”
As part of this executive order, Trump also announced that the interest owners pay on their car payments will now be tax deductible but only if that car was assembled in the U.S.
