The rising car prices are a concern due to the upcoming 25% tariffs on both imported cars and foreign-made car parts in the United States effective from April 3 onwards. President Donald Trump hopes that these tariffs will encourage auto manufacturers to shift their production to the US. However, automotive experts doubt the feasibility of this plan as it would significantly increase manufacturing costs even if companies were able to relocate their production entirely.

In addition to the car tariffs, Trump has already imposed 25% tariffs on steel and aluminum imports and has threatened to do the same for copper. Since these metals are essential for car manufacturing, their tariffs will also contribute to higher production costs. It is estimated that the 25% tariff on imported cars could raise vehicle prices by $5,000 to $15,000 based on the particular make and model, according to Goldman Sachs predictions.

The North American auto industry has operated with minimal border restrictions due to free trade agreements, allowing cars and parts to enter the US without duties. Mexico, for instance, has been a significant source of imported cars to the US. While a significant portion of car production happens in the US, no car is entirely American-made due to the reliance on imported parts. Notably, a considerable percentage of Volvo, Mazda, Volkswagen, and Hyundai's US car sales last year comprised imported vehicles.

Imported cars complying with the United States-Mexico-Canada Agreement (USMCA), negotiated during Trump's first term, will continue to enter the US duty-free until a system is established by US Customs and Border Protection to apply tariffs to non-US parts, as per a White House fact sheet. To access more CNN news and newsletters, users can register at CNN.com.