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President Donald Trump proposed over the weekend that by purchasing a fully-built car in the US, consumers can dodge the 25% tariffs for cleaning foreign vehicles and auto parts. Only problem: nothing.
“If you build a car in the US, you’ll make a lot of money,” he told NBC News in an interview Saturday. “If you don’t, you’ll probably have to come to the US because if you build your car in the US there’s no tariff.”
Trump, who is set to announce a new tranche of broad tariffs on Wednesday, rejected a recent report that industry executives threatened not to do so if the automaker raises prices to offset the cost of import taxes.
Even US-assembled cars by major American brands rely heavily on the complex global supply chain of around 30,000 parts that make up the average vehicle. Overall, Dan Ives, world head of technology research at financial services firm Wedbush Securities, said that the proportion of auto parts sourced overseas accounts for around 40%.
“American cars with all the US parts are fictional stories,” Ives said.
Customs duties or duties are taxes on products purchased from overseas and are used in virtually all countries.
Ivan Drury, director of Insights at Edmunds, told NBC News this month that “no vehicle in the US has all the components manufactured from scratch.”
Senior automotive executives who asked to speak anonymously to avoid disrupting sensitive negotiations with the Trump administration have expressed concern about the industry’s ability to adapt to tariffs due to the manufacturer’s large supply chain. Both American and foreign vehicles are assembled domestically, but built using many parts that are not made in US factories.
A White House spokesman did not immediately respond to requests for comment.
Consumers can see price increases between $4,000 and $12,500 per vehicle, depending on the vehicle, according to the recent estimates from Anderson Economic Group, a consultant company that has worked for major automakers.
Automakers are required to report the composition of their car models to the National Highway Traffic Safety Agency, which publishes the list annually. Mandatory by the US Auto Labeling Act, the report includes the proportion of parts sourced outside the US and Canada, as well as the country of the final gathering and vehicle motors and transmission sources. Drury said the list could be a useful guide for shoppers as certain models may be exposed to customs duties.
For example, the 2025 Kia EV6 is made with 80% of US and Canadian parts, according to the NHTSA listing, making Korean vehicles one of the most North American of the global automakers. Most other models have a much lower proportion of us and Canada’s portion, but the law does not require Canada to distinguish between the components that may limit the components from the car manufacturer to shoppers as they could face up to 25% blanket duties on most products on Wednesday.
Even Tesla, run by heavily-paid Trump adviser Elon Musk, collecting vehicles in the US to collect 20% to 25% of Mexican parts, according to the NHTSA list. Over 175 models (many of which also build several vehicles in the US) from foreign automakers such as Toyota, Volvo and BMW are made entirely overseas.
Amy Bloglyn Peterson, a supply chain expert at Michigan State University’s wide College of Business, says that while the automotive supply chain is robust, it can also become vulnerable if the system is shocked. For decades, US companies have been monitoring a portion of their manufacturing industry, relying on factories in China, Mexico and other countries where labor is cheap.
He said tariffs on these foreign-made parts could be summed, especially within North America, where manufacturing is relatively integrated and items are crossed boundaries multiple times.
“In fact, we consider parts duties to be more of a risk factor than a completed vehicle fee,” says Broglin-Peterson.
It is possible to move the automaker’s supply chain to the US, and in the long run, she said it will be able to meet the Trump administration’s national security goals while strengthening domestic manufacturing. But that can take years.
“From a manufacturing perspective, establishing a presence here is not a short order,” she said. “It comes with a very long timeline. It comes with a huge amount of costs.”
JJ McCorvey and Steve Kopack contributed.
This story first appeared on nbcnews.com. More from NBC News:
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