US President Donald Trump has announced a 25 percent tariff on vehicles that are not assembled in the US. This will affect cars made in Mexico and Canada, resulting in a significant increase in their sticker price, as components made outside the US will also be subjected to these taxes. These will have a significant effect on some carmakers, while for others, it may not make a big difference.
With the new tariff announcement, some carmakers have also announced that they will be investing in the US to set up manufacturing plants. That said, a number of US carmakers will be affected themselves, as they rely on components and parts that are assembled outside the US and shipped back into the country for final assembly.
Trump’s 25 percent tariff hike on automobiles — Who are the winners and losers?
With the announcement of the new tariff on automobiles, many carmakers in the US itself will be affected. However, some may not feel the pinch. Tesla, for example, has a high level of US production (Model 3 Performance 87.5% domestic content and Model Y 85% content). Honda is another company that may not feel a big pinch as it has 63 percent domestic content.
This is more domestic content compared to the US’ own GM and Ford. Other big names such as Nissan, Toyota, Mercedes-Benz, BMW, Hyundai and Kia will be affected by the new tariff. Just five automakers who are popular in the US – GM, Mercedes-Benz, BMW, Hyundai, and Toyota – operate nearly 40 plants in Mexico. The following models have the most domestic content.
| Car Model | Total Domestic Content |
| Tesla Model 3 Performance | 87% |
| Tesla Model Y Long Range | 85% |
| Tesla Model Y Base | 85% |
| Tesla Cybertruck | 82.5% |
| Tesla Model S | 80% |
| Tesla Model X | 80% |
| Ford Mustang GT | 80% |
| Ford Mustang GT Premium | 80% |
| Honda Passport AWD | 76.5% |
| Honda Passport Trailsport | 76.5% |
| Jeep Wrangler Rubicon | 76% |
| Jeep Wrangler Sahara | 76% |
| Volkswagen ID.4 AWD | 75.5% |
| GMC Canyon AT4 Crew Cab | 75.5% |
| Chevrolet Colorado Models | 75.5% |
Hyundai to invest $21 billion
The new tariff has prompted carmakers to start investing in the US, and Hyundai has announced that it will invest $21 billion, between 2025 and 2028. Since entering the US in 1986, Hyundai has invested approximately $20.5 billion. Hyundai will invest $9 billion to set up an annual production capacity of 1.2 million vehicles across its automotive brands: Hyundai, Kia and Genesis, while the money will also go towards improving its production facilities in Alabama and Georgia.
A further $6 billion will be allotted to increase the localisation rate of automotive components, including core parts for electric vehicles, such as battery packs. With the new investment, Hyundai will also create 14,000 new full-time jobs in the US by 2028.
