Border Tax Will Add Thousands of Dollars to New Car Prices

All signs point to buying a car as soon as you can if you're looking for a new one. Congress is giving enough attention to a border tax proposal to warrant concern, or excitement, depending on your point of view. It's clear that a border tax would not help new car prices come down. Prices would get higher, rather. How much higher depends on the brand you want.

Baum and Associates estimates Ford may need to increase prices by only $282, since many of its components are manufactured domestically. The hardest hit manufacturer is Jaguar Land Rover, which is a subsidiary of an Indian corporation called Tata Motors. Jaguar and Land Rover vehicles could end up costing $10,000 to $15,000 more if the border tax proposal goes into effect because they are pure imports, made and assembled overseas.

Accordingly, the manufacturers that will have to increase prices most are those that don't source a lot of parts from the US. Therefore, the question is "what will they do?" Simply raising prices isn't a great option. They will be forced to invest in American parts and assembly or exit the US market completely, leaving us with fewer options and higher prices for the remaining choices.

Many auto leaders are pushing back against the proposal, saying auto prices are already high enough and loan delinquency is a significant problem already. Cody Lusk, president of the American International Automobile Dealers Association, said to Automotive News "we already have an affordability issue with the auto industry. We're already pushing it with consumers, with the average payment going up and loan terms being stretched out." Not surprisingly, some of the automakers that don't rely heavily on important parts have shown support for the proposal. It would, after all, be a major disadvantage to some of their competitors.

Here are the estimated price increases the auto brands would need to enact in order to recoup import tax costs. Thanks to Automotive News (via Baum and Associates) for this information.

Tesla: $0
Ford: $282
GM: $995
Honda: $1,312
Fiat Chrysler: $1,672
Nissan: $2,295
Hyundai/Kia: $2,704
Subaru: $3,656
BMW: $3,725
Mercedes: $4,211
Mazda: $5,156
Mitsubishi: $5,938
Volkswagen: $6,779
Volvo (Geely): $7,643
Jaguar Land Rover: $17,204

Donald Trump originally thought the border tax would be too complicated but has since shown interest. If you're in the market for a new car, start shopping!

Request a free true dealer cost price quote today!


February 24th ,2021

Discover True Invoice Price for New Cars – Ashok

Discover True DealerCost For New Cars At Your Local Dealerships 12 Years Of Satisfied...

Read More
Read More
February 20th ,2021

Discover True Invoice Price for New Cars – Abhishek

Discover True Dealer Cost For New Cars At Your Local Dealerships 12 Years Of Satisfied Customers...

Read More
Read More
May 7th ,2018

Yes, Fuel Efficiency Will Continue Improving

Despite the White House administration's efforts to cancel nearly every regulatory safeguard approved by the US government between 2008 and...

Read More
Read More
April 7th ,2018

Car Subscription Pros and Cons

Car subscriptions are trendy and luxurious. When you subscribe, you typically pay a premium for the ability to switch cars several times a...

Read More
Read More