September 2, 2025 - Tariffs Hitting More Affordable Models

This is the Telemetry Transportation Daily for September 2, 2025, and I'm Sam Abuelsamid, vice president of market research for Telemetry.

The strategy of aggressive tariffs on imports from the Trump administration has already had a significant impact already on the auto industry, with GM announcing it expects a $4-5 billion financial hit this year and Ford expecting a $3 billion cut in earnings. While automakers are reevaluating product programs and where to build vehicles in the coming years, so far, they have minimized the effect on consumer pricing. Rather than passing along all of the tariff costs to sticker prices at once, most automakers are doing smaller incremental price increases, absorbing some of the tariff costs themselves. There are also hidden price increases with both Stellantis and Ford increasing destination and delivery charges. Ford has increased those fees by $200 since the spring of 2025. Ford has also increased some MSRPs, including the popular Maverick, which went up by $1,150 in May. Including the additional delivery charge, the total price has gone up by 5% since tariffs went into effect. 

Other automakers are adjusting their sales strategies and reducing the number of their lower-end models coming into the US, including Mazda.  Only one Mazda model is produced in the US, the compact CX-50 crossover, with everything else coming from Japan. Automotive News is reporting that exports of the Mazda 3 and CX-30 have been slashed since July, since those are its most affordable models. As such, they have lower margins and thus less potential for price increases or absorbing the new costs. Mazda is refocusing its efforts on selling higher-priced vehicles like the CX-70 and CX-90. Many automakers followed a similar strategy during the semiconductor shortages in 2021-2023, instead prioritizing production of those higher margin models. That led to significantly reduced sales so far in the 2020s and average transaction prices jumping by more than $10,000 to nearly $49,000. It will take years for production adjustments to happen as a result of tariffs, and in the meantime, consumers will continue to be hit with higher prices and reduced availability of affordable new vehicles. 

Thanks for listening.