A 25% tariff on imported cars is putting pressure on European luxury automakers, potentially leading to significant price hikes for high-end buyers in the U.S. According to Tim Urquhart, principal automotive analyst at S&P Global Mobility, these buyers could face five-figure price increases.
The tariff was announced by President Donald Trump on April 10 as part of his ‘reciprocal trade’ policy, although he later suggested a possible delay. While some tariffs were deferred for 90 days, this particular levy remained in effect, significantly impacting the ultra-luxury market.
Ferrari Raises Prices as Other Brands Scramble
Ferrari recently announced a price increase of up to 10% on nearly all its models sold in the U.S., affecting even vehicles ordered months in advance, including the new Purosangue SUV and 12 Cilindri grand tourer. Urquhart noted that Ferrari, Bentley, and Rolls-Royce are in a difficult position, unable to absorb the 25% tariff, which will likely be passed on to customers.
Despite having more pricing flexibility than mass-market automakers due to their premium prices, ultra-luxury brands are still facing challenges. Rolls-Royce is assessing the situation, while Bentley plans to continue U.S. imports without deciding on pricing adjustments. Other European automakers are adjusting their strategies quickly.
Other Automakers Adjust Strategies
Jaguar Land Rover temporarily halted U.S. shipments to evaluate the impact, while Audi held deliveries at U.S. ports as it considered its next steps. Mercedes-Benz is reevaluating its lower-end lineup, potentially pulling some entry-level models from the U.S. market due to profitability concerns.
Broader Economic Impact
The tariffs could have significant long-term consequences. A report by Anderson Economic Group estimated that U.S. consumers might pay over $30 billion in added costs in the first year alone, with the average imported vehicle price potentially climbing by $2,500 to $5,000. Ultra-luxury models are expected to rise even more.
Philip Nothard, strategy and insight director at Cox Automotive, highlighted the challenges of shifting production to the U.S. to bypass tariffs, stating that setting up production plants, supply chains, and labor overnight is not feasible.
