America’s tariff rates are at the highest they’ve been since 1910. Nearly every American industry will be absorbing higher costs due to the March 2025 auto tariffs and the April 2025 reciprocal tariffs.
These new tariffs began in the auto industry with a 25% tariff on imported vehicles and auto parts under Section 232 of the Trade Expansion Act. American-made cars and trucks were officially excluded from this policy.
Or were they?
The assumption that “Made in the USA” equals “tariff-free” is a costly misunderstanding. The U.S. auto industry relies on complex and cross-border supply chains. None is more telling than the journey of a single component in the transmission of the Ford F-150, America’s best-selling vehicle.
On a dealer lot, this Michigan-made truck may look like a fully American-made vehicle. In reality, it’s the end-result of a global supply chain of parts and assembly. Automakers are now contending with cumulative tariffs on each border crossing that a component makes. Trade experts call this “tariff stacking,” and it leads to rapidly escalating costs.
In the end, it’s the American consumer who has to foot this bill.
One Truck, Many Borders
The Ford F-150 truck is often seen as a gold standard of American manufacturing. Not only is it the best-selling vehicle in the United States, but it’s also assembled in places like Missouri and Michigan.
Its components tell a vastly different story.
In a recent Wall Street Journal video, journalists found that the constituent parts of a Ford F-150 come from over two dozen countries, from South Korean tires to Canadian half-shafts to Mexican alloy wheels to other parts from Romania, the Middle East, and more. According to Wedbush Securities, approximately 40% of the parts in U.S.-made vehicles are actually foreign-sourced.
But perhaps no part better illustrates the implications of tariff policy than the F-150’s 10-speed automatic transmission. This precision-built and high-value component was developed jointly by Ford and General Motors and is assembled by the Canadian company Linamar.
A Transmission’s Cross-Border Commute
A typical F-150 automatic transmission crosses the border seven times before it’s installed. Three of those crossings go into the United States—and would be subject to the new tariffs.
A transmission consists of a vast array of parts. Those parts begin as aluminum or steel casing material. From there, a housing may be cast and machined in Mexico. A torque converter might come from Canada, while its gearsets are finished in another specialized facility.
Each crossing of the U.S.-Mexico or U.S.-Canada border invites another tariff under the new rules. Even if the sourcing and manufacture of all the constituent parts moved to the United States, they would still have to be machined from raw materials. Raw steel is often imported from abroad, and will be subject to a 25% tariff on imported steel and aluminum.
When border crossings are tariffed, prices can only go one way.
Tariff Stacking and the Multiplier Effect
For the sake of simplicity, suppose a transmission starts at a base manufacturing cost of $1,200. If it crosses the border seven times, and each crossing is taxed at 10–25%, the compounded effect will drive up the cost of this part by several hundred dollars.
This is even before other components are factored in as well.
If you multiply these added costs across all of the F-150’s imported parts, you’re looking at a significant cost increase. In fact, Cox Automotive and Barclays estimate that the 25% auto tariffs alone could lead to a price increase of at least $3,000.
A well-equipped F-150 already priced above $50,000 could push beyond $54,000, at a minimum, solely due to trade policy changes.
Reciprocal Tariffs Make This Worse
The broader tariffs that affect all imported goods from major trading partners will raise the costs of raw materials and electronics. While the tariffs currently do not apply to semiconductors, the U.S. government officials have indicated that this reprieve may not last.
An average car has between 1,000 and 3,000 microchips. If each of these comes with a 34% penalty (the current tariff rate with Taiwan), the effect could be quite severe.
What’s more, these cost increases create a downstream effect. Higher prices increase loan sizes, which makes financing more expensive. Because of that, you might see insurance premiums rise. Repair costs might increase as well, as replacement parts have to follow the same cross-border path.
Consumers will pay more at the dealership, and every time they service or insure the car.
Looking Ahead
Even with tariffs, the F-150 will continue to be sold. It will still be assembled in the U.S. Whether Ford’s supply chain team can pivot to full production of individual parts in the United States is yet to be seen.
Until then, every cross-border bolt, headrest, transmission, or wheel will see its costs increase. The sticker on the truck might say “Made in America,” but the price tag tells a more global story.
