Prices for new cars and trucks, being pushed ever higher by fuel economy improvements, safety equipment and advanced technology, could soar out of range for many buyers with the addition of an import tax to the equation.
Among the vehicles hit hardest would be entry-level nameplates that automakers rely on as gateways for new customers but say they can't make profitably in the U.S.
President Donald Trump and House Republicans have floated the idea of taxing vehicles and other goods that enter the nation's borders, while providing more favorable tax treatment to exports. Such a tax would have drastic effects on the auto industry, raising prices not only on Nissan Versas, Ford Fusions and crew-cab Chevrolet Silverados assembled in Mexico, but also on many of the imported components that U.S. plants use.
The tax would ripple through dealerships, which would pay more to carry higher-priced vehicles in inventory. Auto sales would inevitably decline, as some consumers instead visit a pre-owned lot or hold onto their current vehicles longer, and that could lead to job losses both on sales floors and assembly lines.