Key Takeaways:
Toyota's $3.6 billion Texas expansion is the exception, not the rule, in a U.S. auto industry battered by tariffs that have cost $52.7 billion and eliminated 25,900 motor vehicle jobs since January.
President Donald Trump hailed Toyota's announcement Tuesday that it will invest $3.6 billion to add a second assembly line at its San Antonio plant, shifting Tacoma production from Mexico and creating 2,000 jobs. "Toyota is moving from Mexico to the United States (Texas!). A really big deal. Tariffs at work!" the President wrote on social media.
Yet the Japanese automaker's press release made no mention of Trump or his tariffs, instead citing Texas's pro-business environment and "advanced manufacturing technologies" that may offset higher U.S. labor costs. The broader data tells a different story from the President's narrative of a manufacturing renaissance.
Section 232 national security tariffs on autos and parts have cost $35.2 billion through April, while steel and aluminum tariffs added another $17.5 billion, according to U.S. government data. The combined $52.7 billion in tariff costs has been borne primarily by American companies, workers and consumers — not foreign exporters as Trump has claimed.
Tariff Costs Hit Consumers and Dealers
The Anderson Economic Group estimates that auto tariffs on Canada and Mexico alone added about $1,600 to the cost of each car made in the U.S. last year. A March report by Cox Automotive found that tariffs drove a 10.4% increase in the average suggested retail price of a new car. Sticker prices rose by an estimated $5,000 to $8,900 for imported vehicles and about $1,600 to $2,000 for U.S.-made cars.
Auto dealers — most of which are small businesses — absorbed about 4.5% of the manufacturer's price increase, according to Cox. The sector has shed 6,100 jobs since Trump took office. Manufacturers have also added fees to avoid raising base prices: GM and Ford now charge "destination fees" of $2,795 for full-size trucks and SUVs, with GM increasing fees on its Chevrolet Silverado by 40%, or about $800.
The tariff-driven price increases are pushing younger and middle-class Americans out of the new-car market. New vehicle sales averaged 15.9 million in the first half of this year, down from the 17 million to 18 million range in the five years before the pandemic. When people buy fewer cars, automakers need fewer workers.
Manufacturing Jobs Decline Despite Protectionist Push
The U.S. has lost some 75,000 manufacturing jobs since January 2025, including 25,900 in motor vehicle and parts production. While manufacturing employment has been declining since early 2023 — partly due to an overhang from the electric-vehicle transition — there is no question that tariffs are raising costs for U.S. manufacturers and depressing demand.
Foreign retaliation has compounded the damage. America's farmers have been hurt by retaliatory tariffs, depressing purchases of agriculture equipment. A slowdown in trade has also dented demand for semi-trucks.
The uncertainty hanging over the extension of the U.S.-Mexico-Canada trade agreement is delaying some investments, as businesses cannot predict what trade rules or tariffs will look like in a few years — or even tomorrow under Trump. His trade oscillations and border taxes are a major reason the economy has not performed as well as during his first term, economists say.
The last time tariff escalation reached this level was in 2018-2019, when Trump's first-term steel and aluminum tariffs triggered retaliatory measures that reduced bilateral trade flows and weighed on manufacturing output. The current round is broader in scope, covering autos, parts, steel, aluminum, copper, timber, lumber and pharmaceuticals, and the cumulative cost to U.S. importers has already surpassed the previous cycle's total.
This article is for informational purposes only and does not constitute investment advice.
