Hyundai Has Incredible Timing

President Trump has introduced yet another round of tariffs that could upend the car industry. The newest volley in his trade war promises to slap an extra 25% tax onto any automobile imported into the U.S. It’s a measure meant to sound like a safeguard for American industry against foreign incursion. The reality, as usual, is a lot more complicated. These tariffs will punish many of the most promising EVs on the market, including those sold by Detroit.

The automotive toll of Trump’s tariffs was startling the last time around, when the administration said it would place a 25% tariffs on goods from Canada and Mexico, as well as 10% on Chinese imports. That proposal was particularly problematic for the car industry because automakers use a well-established North American production pipeline to reduce costs. Lots of vehicles, whether gasoline, electric, or hybrid, are built in Mexico before being sold in the United States, while plenty of auto parts manufacturing occurs in Canada.

On the electric side, that list of affected vehicles includes the Chevrolet Blazer EV and Equinox EV, as well as the Honda Prologue, which is based on a General Motors platform. All three are strong EV entries by legacy manufacturers trying to grab a chunk of the electric market as industry leader Tesla takes on water amid global rage at Elon Musk. But all three are manufactured at a GM plant in Mexico. So is the Mustang Mach-E, Ford’s flagship EV.

Heatmap has previously highlighted the Equinox, in particular, because the price of its entry-level version — around $35,000 before tax credits — makes it a compelling option for buyers who are shopping on price but interested in going electric. With a price marked up by 25%, it’s no longer competitive with gasoline-powered rivals. The Prologue has found an impressive niche in the market, especially for the many buyers who were waiting for a Honda-badged EV. But its broad appeal may not survive such a markup.

The newest Trump maneuver, a tariff on cars imported from any foreign country, creates another layer of economic chaos for EVs. These rules would target Japanese-made electric cars like the Toyota bZ4x and Subaru Solterra, German-built ones like those from BMW and Mercedes-Benz, and plenty more. Hyundai’s Kona EV, one of the more affordable electric models, is built abroad. Volkswagen moved assembly of its ID.4 electric crossover to Tennessee, but the ID.Buzz, the battery-powered revival of the classic VW bus, is not made in the USA.

Many of those foreign-owned companies were already moving manufacturing to the United States for basic economic reasons, and also to conform to the rules the Biden administration put in place governing eligibility for the $7,500 EV tax credit, which require that many key parts be sourced at home. Toyota and Honda have opened American plants; so have the German automakers. This could help them adjust to a new and convoluted reality. Hyundai’s new Georgia “metaplant” just opened and will produce the Korean automaker’s Ioniq 5 and Ioniq 9 EV crossovers. Its partner brand, Kia, makes the EV6 and EV9 in West Point, Georgia. These Southern factories will have a huge impact on the Korean brands’ ability to survive Trump-era tariffs and maintain their position as the biggest EV challengers to Tesla.

Trump ally Elon Musk stands to benefit most from this move, since Tesla does most of its manufacturing in the United States. Teslas aren’t 100% American; Musk estimates that 20% of what goes into his EVs comes from Mexico, and that the impact of Trump tariffs on Tesla is “not trivial.” This is a dodge. Yes, Tesla would be impacted by the 25% tariffs, but much less so than its rivals. It’s a bit like the EV price wars of a couple years ago, when Musk kept cutting the prices of his cars because he knew how hard it would be for legacy competitors to keep pace. It’s okay to take a punch if your enemies take a bigger one.

The question looming over all of Tesla’s rivals is how to survive this ever-shifting landscape of tariffs and penalties. Changes in the car industry are a long time in the making: It takes years to bring a new vehicle to fruition, to build a new factory, or to retool an old plant so it can manufacture a different vehicle. GM has spent years refitting a Kansas factory that once built the now-retired Chevy Malibu for the purpose of making the revived Bolt EV coming in 2026. It cannot, at the drop of a hat, suddenly begin to source and build the Equinox EV entirely within the borders of the United States of America. That’s why you’ll see plenty of lobbying over the course of the next month as the car industry tries to convince the administration to back off — or, if not that, to at least give their company a tariff exemption.

The impact for potential EV buyers is clear. New car prices will soar by thousands of dollars with Trump tariffs in place. That will be particularly troublesome for EVs, which are staring down the prospect of this administration trying to remove federal tax credits for Americans who buy electric. Used cars — the pathway to EV ownership for those who can’t afford the steep price tag of a new one — will get more expensive, too, thanks to rising demand from those priced out of new vehicles. If you really want to get into an EV, the best bet might be to act right now before any of this madness takes effect in April.