Trump tariffs could see the Ford Mustang cost more in Australia

03/06/2025 09:00 PM

Car makers in the United States have been given a 30-day reprieve from tariffs applied to imports from Canada and Mexico under President Trump – yet a knock-on effect for Australian showrooms may be inevitable. 

The Trump administration announced 25 per cent tariffs on products from Canada and Mexico imported to the United States (US) with immediate effect on Monday (3 March 2025).

The 'Big Three' US car makers – Ford, General Motors and Stellantis (owner of Chrysler and US brands including Jeep, Dodge and RAM Trucks) – collaborated on a conference call on 4 March with the US president to express their opposition to the move which could have major repercussions on the global car industry.

Ford global president and CEO Jim Farley said US tariffs on Mexico and China would "blow a hole" in the US auto industry, according to a report from Reuters.

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"What we're seeing is a lot of cost, a lot of chaos," the Ford boss was quoted by Reuters regarding the pending tariffs.

Australia has a Free Trade Agreement (FTA) with the US, and while this means there is no tariff on US-made cars imported into Australia, observers say tariffs into the US may increase costs and reduce profit margins.

In many cases, such increases would be passed on the customer wherever the vehicle is sold – including Australia.

Mark Fields, who was Ford CEO from 2014-2017, told CNBC the repercussions went beyond the car makers themselves.

"It's not only going to be hard on the automakers, but it's going to be really hard on the supply base, because they're still reeling from COVID, the semiconductor shortage, and just their overall finances are much weaker in some cases than the automakers," Fields told CNBC.

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Of the 1.2 million new vehicles sold in Australia in 2024 only 30,751 were made in the US, making it the sixth largest supplier to Australia, headed by Japan, Thailand and China. 

While a seemingly low number of vehicles, US-made cars in Australia include the Ford F-150 full-size pick-up, Chevrolet Corvette sports car and the entire Jeep range apart from the Avenger electric SUV, which is made in Poland.

The most popular US-produced passenger vehicle in Australia is the Ford Mustang, which comes from Flat Rock, Michigan, but with its 5.0-litre V8 'Coyote' engine manufactured in Canada.

It's one example of how highly integrated the automotive supply chain is across the US, Canada and Mexico – which could lead to higher showroom prices in Australia.

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A potentially bigger issue is what the tariffs may do to currency values, with fluctuations in the US dollar significantly impactful on the bottom line of car companies in Australia.

General Motors Specialty Vehicles (GMSV) – importers of Chevrolet and Cadillac brands into Australia – was unable to comment on the matter when approached by Drive.

Ford Australia, Ram Trucks' local distributor Ateco, and Stellantis Australia – whose brands include Jeep – have also been contacted by Drive for their views.

After Trump announced the 25 per cent tariffs for Canada and Mexico with immediate effect during the week, the three car makers argued the tariffs should not apply to vehicles complying with the USMCA (United States-Mexico-Canada Agreement).

The July 2020 agreement – entered into during Trump's first term as US president – meant a vehicle must have a certain amount of US content, including 70 per cent US steel and aluminium, among strict USMCA criteria.

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Trump gave the automakers some breathing space with the tariffs paused, now scheduled to come into effect for the auto makers on April 1, 2025.

Stock for each of the three US car makers went up when news of the 30-day extension was reported.

"We appreciate President Trump's work to support our industry and exempt auto companies complying with USMCA," a statement from Ford said.

Meanwhile, Stellantis was cautious in its approach, telling Reuters, "We are prepared to work with the Trump administration to support further investment in our US manufacturing footprint but we need time to make these changes without negatively impacting the business and our customers."

According to The White House, the tariffs are necessary to 'safeguard the nation' against "the extraordinary threat to US national security, including our public health posed by unchecked drug trafficking".

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