Trump's tariffs could see average new car prices rise by as much as $2,700, Jefferies analysts say

• Trump's tariffs on Canada and Mexico could raise average new car prices by $2,700, Jefferies analysts found.
• The levies will hit automakers like GM and Stellantis, which import vehicles from Mexico, especially hard.
• Even Tesla would not be immune, with the company's CFO warning last week tariffs "would have an impact."

Donald Trump's tariff offensive has thrown the auto industry into chaos — and it could make your next car more expensive.

The president announced 25% tariffs on all goods imported from Canada and Mexico and a 10% levy on China on Saturday, a move Jefferies analysts warned could add $2,700 to the average price of a new car in the US.

The import taxes sparked global market uncertainty on Monday after all three countries vowed to retaliate. Canada has already done so, saying it will put a 25% tariff on $30 billion of US goods.

While Trump said on Monday the introduction of tariffs on Mexico would be paused for a month, if implemented, they will significantly impact US carmakers.

Lured by low labor costs and cheap parts, automakers have built up their presence in Mexico over the past few decades. Detroit's "big three" of Ford, General Motors, and Stellantis, as well as foreign powerhouses like Toyota and Nissan, all build vehicles in Mexico to import to the US market.

Even car companies that assemble their vehicles in the US, such as Tesla and Rivian, are likely to face higher costs thanks to the levies extending to vehicle and engine components.

In a note on Sunday, Jefferies analysts estimated that a 25% levy on goods imported from Canada and Mexico would add $43 billion to industry costs, with Ford, General Motors, and Stellantis being the most exposed.

Other estimates were equally dire. In a note seen by Business Insider, analysts for research firm Wolfe Research said the average price of a new car may climb by around $3,000.

Patrick Anderson, chief executive of consulting firm Anderson Economic Group, told The New York Times the tariffs could add $10,000 or more to the price of trucks and large vehicles imported from Mexico.

Auto executives have been bracing for the impact of Trump's tariffs ever since the Republican won the presidency for the second time in November.

In an earnings call last week, Tesla's Chief Financial Officer Vaibhav Taneja said there was "a lot of uncertainty" around the taxes.

"Over the years, we've tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely, and any will have an impact on our business and profitability," Taneja said.