Report: Sustained tariffs on autos could lead to hundreds of thousands of job losses

WACO, Texas – The US economy could lose hundreds of thousands of jobs, if tariffs on automobiles and the parts of automobiles are sustained, according to The Perryman Group.

In a brief focusing on the auto industry, The Perryman Group studied recent data. It indicated that motor vehicles valued at approximately $268.9 billion were imported to the US in 2024, including autos and light duty vehicles ($247.1 billion) and heavy duty trucks ($21.7 billion). Another $148.9 billion in motor vehicle parts were also imported.

The brief is titled, The Potential Economic Impact of Sustained Tariffs on Automobiles and Parts.

“When a tariff is imposed, the importing firm (typically a US business) pays the tax to the US Treasury. Importers then pass much of the added cost to consumers and absorb any remainder through lower profits,” The Perryman Group stated.

“The inevitable result is price increases and a diversion of money from the spending stream, causing major economic dislocations and harms.”

The group said that because of the highly integrated global supply chain in the auto sector, the disruptions are particularly problematic and create the possibility of “cascading levies during the production process.”

The Perryman Group recently examined the losses (including multiplier effects and accounting for any offsetting gains in production by US manufacturers) assuming a sustained 25% tariff on automobiles and parts.

“The net cost of such a tariff on motor vehicles would be approximately $40.5 billion in annual gross product, and about 339,300 jobs,” The Perryman Group stated,

“If automotive parts are also included, the cost rises to $84.6 billion in annual gross product and 715,400 jobs.”

And then there is the question of retaliatory tariffs. The Perryman Group said these would be likely. “Such levies would reduce the competitiveness of US automobiles on world markets,” the group stated.

The situation remains in flux as countries around the globe retaliate, The Perryman Group stated. The flux would also be caused by frequent changes in US policy. This unpredictably creates its own set of issues associated with uncertainty, the group noted.

“Nonetheless, these estimates illustrate the enormous magnitude of the potential costs of tariffs on automobiles and parts, irrespective of their stated purpose. The recent escalation in tariffs is causing disruptions and high costs across a broad spectrum of the economy,” the group added.

Editor’s Note: Click here to read the brief in full.

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