Global analysts predict US tariffs will have a knock-on effect around the world – but the local automotive body says they will have little impact for Australian new-car buyers.
Australia’s peak automotive body – the Federal Chamber of Automotive Industries (FCAI) – says the impact of US tariffs on new car prices and the broader automotive industry in Australia will be "limited".
A 25 per cent tariff on all vehicles imported into the US will come into effect on 3 April 2025 with key components – such as engines, transmissions and electronics – also subject to the new tax after US President Trump ignored calls from Ford, General Motors, and Stellantis not to go ahead with the move.
“Australia imports a relatively small proportion of its vehicles from the US, thus the total impact on Australian buyers is expected to be limited,” said FCAI chief executive, Tony Weber, after a request for comment from Drive.
“We will monitor how other nations respond to the US decisions and their impact on the automotive world.”
Analysts predict the costs to restructure due to the tariffs will have global ramifications, with new vehicle prices in the US anticipated to rise by as much as $US12,000 per vehicle ($AU19,200), impacting the operating costs and global bottom line of every car maker.
Prices in Australia could increase or potentially decrease if car makers look for alternative markets instead of the US.
“It is becoming crystal clear this tariff US policy will cause pure chaos to the global auto industry,” said Dan Ives, an analyst from US-based financial services firm Wedbush.
Ives told US network CNBC the tariffs are “worse than the worst-case scenario” for the US more broadly.
Suggestions the tariffs will only impact US consumers do not consider the increased costs of restructuring export businesses, especially in the wake of additional blanket tariffs announced on 2 April 2025 for car-making nations including South Korea, Japan, and China.
China has one of the highest new tariffs at 34 per cent on all imports, which will be in addition to the already announced 25 per cent tariff.
The affect this will have on the Chinese economy – the world’s largest new-car market – could impact showroom prices for new cars here in Australia, economists suggest.
The same goes for South Korea and Japan, which have been given 25 per cent and 24 per cent ‘blanket’ tariffs which, again, are in addition to the 25 per cent for automotive tariffs.
The South Korean automotive industry exported almost half (49.1 per cent) of the 3.8 million vehicles it manufactured in 2024, worth $US34.74 billion according to The Korea Herald.
Japan’s automotive industry exports 2.3 million cars annually to the US, worth around 6 trillion yen ($AU68 billion) according to the Australian Financial Review.
Not factoring the new 24 per cent blanket tariff, it reports the 25 per cent tariff alone is projected to take 0.2 per cent GDP (Gross Domestic Product) off the country’s economy – equating to around $AU13 billion.
While Australia does not export cars to the US, it does have export businesses and suppliers – such as Victoria-based wheel manufacturer Carbon Revolution, South Australia-based manufacturer Redarc and Queensland-based PWR Advance Cooling Technology.
