I know, I know. We’ve been down this road before. The trade dynamics change (again)…levies go up or down, or get delayed, or get renegotiated, or…
But on August 1, a wide variety of long-threatened tariffs went into full effect, thereby transitioning what had been a series of negotiations into a fully formed policy. An increase on Canadian goods from 25% to 35%, a broad swath of “reciprocal” tariffs ranging from 10% to 41% on countries from Afghanistan to Zimbabwe, and a host of new restrictions and penalties went into effect. A new 50% levy on copper imports also has an impact on the auto industry--especially for EVs, which require an average of 130 pounds of that material per vehicle.
And while the impact of previous trade actions have been less impactful than anticipated due to a variety of factors—OEMs shifting production toward lower priced models and trims, for example—the month of August has seen a decided shift upward. What had been a $219 gap in non-luxury Average Marketed Price (between July 1 and August 1) has quickly ramped up to a $710 differential on August 13.
Just in the last 12 days, the Average Marketed Price of (non-Tesla/Rivian) Electric Vehicles has increased by $779. Meanwhile, Full-Size Truck (+$668), Heavy Duty Trucks (+$479) and Mid-Size Trucks (+$370) also contributing to the overall runup.
With the tariff picture coming more into focus, the financial hit to the industry is doing the same. Ford reinstated their 2025 guidance, which included a $2B cost for this year alone, while General Motors has estimated this year’s tariff related expense to be up to $5B. Stellantis, meanwhile, has estimated its cost to be $1.7B.
While it's too early to pin down the exact mix of causes, the timing suggests a confluence of two key forces: the direct financial impact of newly implemented tariffs and the seasonal price uptick tied to model year changeovers. As OEMs start to embed these higher input costs into their next model year pricing strategies, we could be looking at a more sustained pricing escalation. If that’s the case, the August trend might just be the opening chapter in yet another round of recalculations for the industry—and affordability challenges for consumers.