There is NO 100% American Car – That Sucks for the US Car Buyer
It is true there is no car currently on sale in Americaland that is 100% made in the US of A, and as a result of the upcoming Trump tariffs, all new cars sold in there will cost more. Every car currently on sale in the US is at least in part imported, and as the US commerce department is considering a hike in the tariffs on foreign-assembled cars and on auto-parts, this will inevitably result in higher costs for the US car buyer.
For years, automakers have excelled in maximising economies of scale in their manufacturing and also by moving production to parts of the world where labour is cheaper. This has resulted in just about every major brand, particularly in the US, relying on at least some imported parts for their cars.
In the US, the commerce department has for years tracked how ‘American’ a car is by the content of these imported parts. The most ‘American’ car on sale in the US at present is the Honda Odyssey minivan and Honda Ridgeline pickup truck. These two vehicles rate a score of 75% American. The next most American cars are the Honda Civic and Accura TLX, with the Mercedes C-Class in the mix with 70% American content.
One of the most “American” cars, the Honda Odyssey, is still 25% foreign.
You have to look down the list to seventh place to find the first recognisable American brand/car: the Chevrolet Corvette, which has approximately 66% of its parts classified as American. What about the Tesla, a vehicle that is as American as apple pie, we hear you ask. Well, that particular all-American hero is only 50% homegrown, with the rest being sourced from overseas and, in particular, China.
Detroit cars have long been produced in neighbouring Mexico, where the cost of land and labour is much cheaper and government restrictions more lax. Cars built there, even though they are American-badged, will cost significantly more if the tariffs are implemented. The big American automakers are currently suggesting that the increase in the tariffs will cost them about an extra US$35 billion for parts and a whopping US$45billion for completed assembled cars. All these costs will be passed on to the consumer.
Currently, there is simply not enough capacity in the US manufacturing system to swap over to locally made parts, and thus the American Automotive Policy Council is suggesting that a car with 35% imported content will increase in price by at least US$2,000. An increase in the cost of cars will of course lead to reduced new cars sales and very possibly a loss of the very jobs that President Trump is trying to preserve.
Toyota North America believes that the Camry, currently the best-selling sedan in the US and made (mostly) at its Kentucky factory, would see a price increase of US$1,800. Some automakers may be able to absorb the price rises in an effort to maintain sales and market share, but GM has already indicated that it is preparing for job losses at its US factories should sales fall, as it anticipates.