20 Affordable Cars a Trump Tax Would Make Expensive
To back up anti-trade rhetoric and an “America first” slogan, President Donald Trump threatened automakers with a border tax on any vehicle assembled in Mexico. The idea is such a tariff would force companies to maintain or increase production levels in the U.S. Trump has suggested taxing cars and trucks between 20% and 35% when they enter the country through our southern border.
Due to the realities of the auto industry in the 21st century, many analysts are skeptical new taxes would help the cause for American manufacturing. Because many cars assembled in the U.S. use parts made in Mexico, the tax would only address one part of the equation. Meanwhile, for American consumers, Trump’s tariff would mean a major hike in prices at auto dealerships.
According to a study by car-buying site Carjojo, consumers at the lowest income levels would feel the burn most. For families earning $27,500 a year, the markups would represent 12% of pretax annual income. Carjojo found that vehicles on sale for less than $20,000 would rise an average of $2,700 at a combined tax rate of 19%. In this scenario, middle- and low-income Americans would pay billions in new taxes to the U.S. Treasury.
To complement Carjojo’s findings, we identified other Mexico-assembled cars with low MSRPs that would get pricey with a border tariff. Here are 20 affordable vehicles that would become expensive if Trump’s car tax went into effect.
1. Nissan Versa Sedan
New cars don’t come cheaper than the Nissan Versa sedan, which starts at $11,990 and manages 39 mpg in highway driving. Budget-conscious U.S. consumers bought 132,214 models of the Mexican-built car and Versa Note variant in 2016. Slap a 20% tariff on it, and these models veer toward a $15,000 starting price. At that point, it stops being a value play.
2. Chevrolet Trax
American consumers love their crossovers, and the Mexican-built Chevrolet Trax is among the most affordable products on the market at $21,000. With a border tax, that would push the price up to over $25,000. That’s more expensive than the next Chevy crossover — the Equinox — in the brand’s lineup.
3. Ram trucks
While U.S. workers assemble Ram 1500 trucks, heavy-duty models hail from Fiat Chrysler’s plant in Saltillo, Mexico. According to WardsAuto data, about half (246,000) the Ram pickups sold in the U.S. in 2016 came from that location. (Ram Promaster vans also come from Mexico.) Starting at $32,145, the 2500 and 3500 pickups are invaluable tools of the contracting trade. If they cost closer to $40,000 with a border tax, we wonder about the impact on construction jobs.
4. Nissan Sentra
Carjojo data showed the Nissan Sentra was the most popular car under $20,000 between August 2016 and January 2017. In those six months, American consumers bought 70,768 models of the Sentra, which starts at $16,990. Spread out over a year, that sales volume would cost U.S. car buyers $1.2 billion with Trump’s proposed tax on top.
5. Ford Focus
You might have caught wind of the noisy exchanges between Ford and Trump from the presidential campaign through the early days of the administration. Much of it was just noise. Here are the takeaways:
- Ford announced 700 new jobs would come to Michigan to support its autonomous and electric vehicle programs.
- Following its original plan, Ford small-car production will move to Mexico, creating 3,800 new jobs in Chihuahua and Irapuato.
For consumers hoping to buy a Ford Focus ($16,775), the Blue Oval compact will be assembled in Mexico starting in 2018. A 20% border tax would push its base price over $20,000.
6. Honda HR-V
The Honda HR-V is another subcompact SUV that hails from Mexico at an affordable price ($19,465). U.S. consumers picked up nearly 40,000 models in the last half of 2016. With a pace exceeding 80,000 sales a year, Honda-buying Americans would wind up paying $750 million to Uncle Sam if the president pushed through a border tariff.
7. Jeep Compass
If you want a lower-priced Jeep, you might be shooting for Compass, the Mexican-built SUV that starts at $20,995. During the period Carjojo’s study covered, this model had a base price of $19,940. A hefty border tariff would push the price near $25,000, making Compass more expensive than Wrangler ($23,995) and Cherokee ($23,595).
8. Toyota Corolla
America’s favorite value play is Toyota Corolla. At fifth place in 2016 sales, Corolla sold more (378,210) than the entire Mercedes-Benz lineup. Starting in 2019, a Mexican plant will take over production duties. With a tax in place, the $18,500 Corolla would cost over $22,000. Meanwhile, an import tax would raise the price of America’s No. 1 car: Toyota Camry. The midsize sedan, built in America with some Mexican-sourced parts, would cost about $1,000 more with a border tariff, said Jim Lentz, CEO of Toyota North America.
9. Chevrolet Silverado
While about 60% of Chevrolet Silverado production takes place in the U.S., the other 222,000 models of America’s second-favorite truck come from Silao, Mexico. That plant produces four-door Crew Cab models for domestic consumers. With a base price of $37,330, a Mexican import tax would raise this work vehicle’s price to over $45,000. Consumers would pay $1.6 billion in taxes on Silverado alone.
10. Volkswagen Jetta
Jetta is Volkswagen’s most popular and affordable car on sale in America. In 2016, consumers bought over 120,000 models of this car, which has a base price of $17,895. Because workers at the automaker’s factory in Puebla, Mexico, assemble Jetta, it would be one of the vehicles hit by a border tax. Its price would rise close to $22,000.
11. Ford Fusion
While some Ford Fusion production returned to Michigan in recent years, the popular midsize car is now built exclusively at the automaker’s Hermosillo, Mexico, plant. U.S. consumers bought 265,840 Fusions in 2016, making it the 13th most popular vehicle in America. Its current price of $22,120 would rise over $4,000 from a Mexican border tax.
Gearheads love the sporty, economical Mazda3, which starts at $17,845. On the import front, it is one of the vehicles Mazda produces in Salamanca, Mexico, so it would be subject to any new border tax. With Trump’s tariff in place, the base price of a Mazda3 would exceed $21,000. That price point gets American car shoppers a midsize sedan.
13. Dodge Journey
While small cars take up most of the market under $20,000, compact SUVs are crowding in, as well. Affordable models, such as Dodge Journey, which starts at $21,195, would take a hit from Trump’s car tax. Journey, which comes from the Toluca plant in Mexico, would start over $25,000 if a 20% tariff went into effect.
14. Kia Forte
The compact Kia Forte ($16,600) keeps a low profile but was a big seller in 2016. American car shoppers drove home over 100,000 new Fortes on the year. If you tacked on a 20% tax on the car from Monterrey, Mexico, Kia would be forced to market the same model for about $20,000.
15. Volkswagen Golf
Starting in 2014, Volkswagen has produced Golf ($19,895) in Puebla, Mexico, along with other U.S. market compacts. The company’s manufacturing presence in Mexico is nothing new, either. Volkswagen opened its first plant there in 1964, when it began producing the classic Beetle, something it continued to do until 2003.
16. Toyota Tacoma
The Fremont, California, plant where Toyota originally built the Tacoma now belongs to Tesla. Now, the Japanese automaker splits production between its factories in Texas and Baja, California (Mexico), where about 85,000 models were produced for U.S. buyers in 2016. Tacoma starts at $24,320 and would cost over $29,000 with a 20% border tax.
17. Honda Fit
The subcompact Honda Fit was another small car manufacturers produced in Mexico to keep costs low for consumers. (Production returned to Japan in late 2016.) Americans bought 56,630 models of Fit, which starts at $16,090, in 2016. Tariffs of 20% or higher would push this car’s starting price close to $20,000 with manual transmission. Automatic models start at $18,800 and would cost over $22,000 — about the same as a 2017 Ford Fusion.
18. Ford Fiesta
Nearly 50,000 Americans drive home a new Ford Fiesta in 2016. The sporty mini car is among the very cheapest vehicles on the U.S. market with a base price of $13,660. With a stiff border tax in place, the Mexican-assembled Fiesta would rise above $16,000. Forgive the translation pun, but we’re guessing the party would be over at that price point.
19. Fiat 500
Small cars have been less popular as consumers shift to SUVs, but Fiat 500 is among the dwindling number of new vehicles starting below $15.000. A base model with manual transmission had an MSRP of $14,995. Tack on a 20% tax, and this car would cost $18,000. Suddenly, it would not be much of a deal.
20. Toyota Yaris
Corolla, Camry, and Tacoma would not be the only affordable Toyotas models getting a price hike from a Mexican import tax. The brand’s subcompact Yaris iA ($15,950) would cross the $19,000 threshold with a 20% tariff in effect. This car is not a big seller with high-end car buyers, but it would cost low-wage earners tens of millions of dollars in new taxes.
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