Sweeping new US tariffs on imported vehicles and parts are sending shockwaves through the automotive industry, inflating production costs and car prices. Here’s how automakers are responding, what drivers can expect, and how to navigate the changing market.

The US automotive market is facing a seismic shift as new tariffs of 25% on imported vehicles and parts take effect. Introduced by the Trump administration in early 2025, the measures aim to bolster domestic auto manufacturing. However, the immediate impact is a sharp rise in production costs, which is already being passed on to consumers in the form of higher car prices.

In April 2025, the average price of a new vehicle in the US jumped by 2.5% compared to March, more than double the typical increase for this time of year. Analysts attribute this surge to the tariffs, which have disrupted the global supply chains that underpin modern car manufacturing. Even vehicles assembled in the US are affected, as they rely heavily on imported components that now carry hefty duties.

How major automakers are responding

The tariffs have forced both domestic and international automakers to rethink their strategies:

• Detroit’s Big Three (GM, Ford, Stellantis): These giants are among the most exposed. The Center for Automotive Research estimates that tariffs will raise costs for all domestic automakers by $107.7 billion in 2025, with GM, Ford, and Stellantis alone shouldering $41.9 billion of that burden. For each vehicle assembled with imported parts, the average tariff cost is nearly $5,000; for fully imported vehicles, it’s about $8,700.
• Production shifts and pauses: To adapt, GM has increased truck production at its Indiana plant, while Stellantis has temporarily shut down plants in Mexico and Canada, affecting related US facilities. Some models-especially those built in Canada or Mexico-are seeing production pauses or even price hikes, as seen with Ferrari and BMW.
• Foreign automakers: Asian and European brands are also hit hard. German automakers, for example, often assemble cars for the US market in Mexico, and the new tariffs erode the cost advantage of such arrangements. Some companies, like BMW, have pledged to absorb tariff costs temporarily, but only for a limited time.
• Electric Vehicle Manufacturers: The impact is especially pronounced for EV makers, who depend on globally sourced rare materials and components. Tariffs could add thousands of dollars to their production costs, potentially stalling the momentum of electric mobility in the US.

What drivers can expect: Price hikes and parts delays

For American drivers, the consequences are already visible and likely to intensify:

• Higher prices: The most immediate effect is sticker shock. Not only are imported vehicles more expensive, but even US-made cars are seeing price increases due to the reliance on foreign parts. Some automakers are rolling out promotions or discounts to cushion the blow, but these are often temporary.

• Parts shortages and delays: The tariffs also apply to imported auto parts, including critical components like engines and transmissions. As a result, parts shortages and longer repair times are expected, especially for vehicles that rely on cross-border supply chains.

• Reduced choice: Some foreign brands are considering pulling their most affordable models from the US market, while others may shift production or scale back offerings, reducing consumer choice and competition.

• Uncertainty and volatility: The tariffs have injected a new level of unpredictability into the market. With monthly negotiations on tariffs for Canada and Mexico, automakers and consumers alike face ongoing uncertainty about future prices and vehicle availability.

The impact of US auto tariffs is not confined to American shores. As a global trading hub with a significant presence in automotive trade and manufacturing, Singapore is poised to feel the aftershocks of these sweeping US policies, both for businesses and everyday drivers.

The Monetary Authority of Singapore (MAS) has warned that the US tariffs will create a “broader negative income and demand shock” for the Singapore economy. The multiplier effects of these tariffs are expected to ripple through various sectors, including autos and auto parts, electronics, and machinery. The US is Singapore’s second-largest export market, and tariffs act as a direct tax on producers and exporters, potentially reducing corporate revenues and profits while dampening overall demand in the city-state.

Singapore’s automotive sector, though small compared to manufacturing powerhouses, is deeply integrated into global supply chains. Many Singapore-based companies export intermediate goods, such as electronic components and precision parts, that end up in vehicles assembled in the US or other tariff-affected countries. When these goods are hit by tariffs, or when Singapore’s trading partners face reciprocal tariffs, the compounded impact can reduce overall competitiveness and drive up costs across the supply chain.

For Singaporean drivers, this means:

• Higher car prices: Imported vehicles, especially those with significant US content or those assembled in countries facing reciprocal tariffs, are likely to see price hikes. Automakers may pass on increased costs to local distributors, raising showroom prices for new cars.

• Parts and repair delays: With tariffs also affecting auto parts, Singapore’s workshops and dealerships could face delays or higher costs in sourcing critical components. This could translate to longer wait times and steeper bills for repairs, especially for American brands or models with US-made parts.

• Used car market pressure: As new car prices rise and parts become more expensive, demand for used vehicles may increase, potentially driving up prices in the secondhand market as well.

Practical tips for car buyers and owners

Navigating this new landscape requires a strategic approach. Here’s how drivers can protect their wallets and keep their vehicles running smoothly:

For Buyers:

• Act quickly, but carefully: If you’re in the market for a new car, consider buying sooner rather than later. Prices are likely to continue rising as inventories shrink and costs climb.
• Shop around: Take advantage of manufacturer promotions and dealer incentives, which may help offset some of the tariff-driven price increases.
• Consider domestic models: Vehicles with a higher percentage of US-made parts may be less affected by tariffs, potentially offering better value.
• Be flexible on model and trim: With some models facing production pauses or limited availability, consider alternative trims or similar vehicles from different brands.

For Owners:

• Maintain your vehicle: With parts shortages and higher repair costs on the horizon, regular maintenance is more important than ever. Preventive care can help you avoid expensive breakdowns and delays.
• Plan for repairs: If your car needs major repairs, especially those involving imported parts, expect longer wait times and higher costs. Schedule service appointments early and discuss parts availability with your mechanic.
• Consider extended warranties: An extended warranty or service contract may provide peace of mind against unexpected repair bills in a volatile market.

The Bigger Picture: Long-term implications

While the tariffs are designed to promote US manufacturing, their broader impact is complex. The global nature of automotive supply chains means that even domestic production is intertwined with international trade. As automakers restructure operations and pass costs to consumers, the risk is that higher prices will suppress demand, slow innovation, and ultimately reduce competitiveness in the US auto industry.

Industry analysts warn that the current situation could lead to reduced competition and fewer choices for consumers, as well as job losses both at home and abroad if production shifts or contracts. The uncertainty surrounding ongoing trade negotiations further complicates planning for automakers and buyers alike.

For Singapore, the implications are direct and multifaceted:

The Monetary Authority of Singapore (MAS) warns that US tariffs will “generate a broader negative income and demand shock” to Singapore’s economy, affecting corporate revenues and overall demand in the trade-dependent city-state.

Despite having a free-trade agreement with the US, Singapore faces a 10% tariff on its exports, including critical automotive components and electronics, which could disrupt its role in global supply chains.

The ripple effects extend beyond direct exports: Singapore-based manufacturers supplying parts to affected automakers may face reduced orders, while repair workshops could experience delays in sourcing tariff-hit components.

However, Singapore’s strategic position as a global trade hub might partially offset these impacts through trade rerouting opportunities, particularly as companies shift supply chains away from China.

Looking ahead

The new US tariffs on imported vehicles and parts are reshaping the automotive landscape, driving up costs for manufacturers and prices for consumers. Major automakers are scrambling to adapt, with production shifts, pauses, and selective price hikes. For drivers, the result is higher prices, potential delays in repairs, and a more uncertain market.

As the US implements sweeping tariffs on vehicles and parts, Singapore faces a period of heightened economic uncertainty and adjustment. The city-state’s open, trade-dependent economy makes it particularly sensitive to global policy shifts, and these new tariffs are no exception.

The US is a key trading partner for Singapore, and the introduction of tariffs directly affects local exporters, especially those in electronics, precision engineering, and automotive components. With higher costs to access the US market, Singaporean firms may see reduced demand for their products, tighter profit margins, and the need to rethink their supply chains. Some businesses may be forced to absorb extra costs, pass them on to customers, or even scale back operations.

With export volumes under pressure, there is a risk of slower economic growth and potential job losses in sectors linked to manufacturing and trade. The government has already revised its growth forecasts downward, and many analysts warn that continued trade tensions could further dampen business sentiment and hiring.

For consumers, these global trade disruptions could translate into higher prices for imported vehicles, spare parts, and even electronics. Car buyers may notice price increases or longer wait times for certain models, while vehicle owners could face delays and higher costs for repairs if parts become harder to source. The used car market may also become more competitive as buyers look for alternatives.

Singapore’s strength has always been its adaptability. Businesses are likely to accelerate efforts to diversify supply chains and seek new markets, while consumers may become more discerning about big-ticket purchases. Staying informed about market trends and being flexible in purchasing decisions will be key for both companies and individuals.

While Singapore is not at the centre of the US tariff policy, the ripple effects are real and will require careful navigation by businesses and households alike. The coming months will test Singapore’s resilience, but with prudent planning and adaptability, the nation can weather these global headwinds.

In this climate, being proactive-whether by buying sooner, maintaining your current vehicle, or staying flexible-is the best way to navigate the road ahead. As the industry adjusts to these sweeping changes, both automakers and consumers will need to stay alert and adaptable.