President Donald Trump recently announced 25-percent tariffs on all imported vehicles, sending automakers into yet another frenzy as they try to guess what’s coming next. While even the most American-made cars contain imported parts that could be impacted by the trade war, the President said House Speaker Mike Johnson is taking steps to incentivize the purchase of a domestically-produced car.
The Speaker is working on a plan to provide tax deductions for the interest paid on loans for U.S.-built vehicles. As these things have tended to go recently, Trump dropped the news without much detail, saying on March 26, “If the car is made in America, you get a loan, you can deduct the interest. That’s a big saving.”
The ability to deduct interest payments could be a big draw for buyers and many analysts expect it to be a good thing in general, but the deductions likely won’t compensate for higher vehicle prices and they won’t add up to a ton of money at the end of the year. J.P. Morgan auto analysts predicted that interest rate deductions would bring around $20 in savings each month, but tariffs have the potential to add $60 to $90 at the same time.
President Trump believes the move will drive more American auto production, and he’s likely correct, but it won’t happen overnight. It’s also worth noting that tariff announcements and tariff implementations are two different things, so while Trump’s plan is to enact the duties starting April 3, the situation could change one way or the other over the next few days.
[Images: Ford, Cadillac]
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