03/03/2026
What is the Intended effect of Tariffs?
In some respects, the Trump administration’s tariffs are having their desired effect, at least on portions of the auto industry.
In its February forecast released Feb. 19, J.D. Power noted that U.S.-built vehicles were expected to represent more than 55 percent of U.S. sales this month, up 4 percentage points, while vehicles built in other nations lost share.
Tyson Jominy, senior vice president for data and analytics at J.D. Power, said the over 4 percentage point share gain in U.S.-made vehicles over the last year was significant. But the movement was largely the result of actions by automakers to take better advantage of their U.S. production when tariffs were enacted.
“The auto industry, with its long lead times and global supply chain, it’s not very easy to turn the ship, to change course that quickly. It takes a long time,” Jominy said. “Four percentage points in a year might be viewed as about as fast as could possibly be done.”
Automakers continue to announce production shifts that increase manufacturing in the United States at the expense of long-trusted trading partners like Canada and Mexico. Meanwhile, government revenues from tariff collections are soaring as the auto industry and others scramble to adapt to a new set of economic realities.
According to a recent analysis by the Federal Reserve Bank of Chicago, automobiles and auto parts now account for over 18 percent of the tariffs collected by the U.S. government. The Fed cited a Bain & Co. analysis that found that automakers have thus far been absorbing the bulk of the costs, but those actions had resulted in a drop in EBIT [earnings before interest and taxes] margin from 8.1 percent in mid-2024 to 3.9 percent during the first three quarters of 2025. Since Oct. 1, the federal government has collected nearly $125 billion in tariffs, up 304 percent over the same period a year ago, CNBC reported earlier this month.
Automakers have attempted over the last year to come up with strategies to mitigate the added costs of tariffs without passing too much onto consumers already struggling with affordability.
Volkswagen tried early on to include the added impact of tariffs on each vehicle’s Monroney window sticker as a separate line item, but pulled back on the effort. Hyundai-Kia has touted its decision to hold pricing in the face of tariffs — a large driver of why South Korean-built vehicles saw their marketed price fall from last October in the CatalystIQ study — but that decision weighed on its most recent earnings.
Read more:
A VIN-level analysis of new vehicles advertised by dealers in the U.S. by CatalystIQ found the sticker prices of Canadian-built vehicles rose almost 10 percent over the last seven months, the largest increase among nations subjected to the Trump administration's tariff regimen.
