Tariffs and the Prices of American-made Goods
Case study of Ford F-150s and Tesla Model 3s
April 18, 2025
Much has been said on how the April “reciprocal tariffs” — Trump’s “Liberation Day” tariffs — now paused until July, will affect the cost of foreign-made goods to American consumers. (Not to mention the stock market!)
But what about the cost of American-made goods to American consumers?
Few have the numbers. For domestically manufactured products, the cost of tariffs must be applied to the whole bill of materials. For every of ~hundreds of components, how much does it cost, which country supplies it, and which tariffs apply?
The cost increases are obscured by the complexity of the calculation and the lack of public data. So we did the research and crunched the numbers. We picked Ford F-150 trucks, and Tesla Model 3s.
Our findings may surprise American consumers who don’t expect big price increases in domestically manufactured goods.
1. Tariffs are likely to drive the average Ford F-150 car payments over $1,000/month
In Q4 2024 the average Ford F-150 buyer was paying over $900 per month. If Ford’s cost increases are passed on to the buyer, as seems inevitable — even if Ford eats over a third of those increases, in the case of full “Liberation Day” tariffs — this average payment will climb beyond $1,000/month.
This isn’t specific to Ford or the F-150: as shown in the charts at the end, Tesla Model 3 manufacturing costs, and likely therefore prices, will increase by roughly the same percentage.
Why is this not higher?
2. Despite the “trade war” headlines, tariffs on Chinese auto parts will fall drastically in May
While the headline tariffs on Chinese imports are staggeringly large — 245%, as of this writing! — headlines on auto parts are currently scheduled to fall to a much, much lower 25% Section 232 tariff on May 3rd.
That tariff rate will apply to automotive parts imported from China, and every other country excluding Mexico and Canada. The administration is clearly aware of how vulnerable the US auto industry is to an outright trade war and is quietly minimizing its impact on them.
We project that tariff costs on Ford F-150s and Tesla Model 3s will go up again in July as Mexico and Canada tariffs take effect.
3. American-made goods are going to get a lot more expensive
Why are these cost increases higher than people expect?
In the weeks after the tariffs were announced, people of all political spectrums are waking up to the heavy dependence that US manufacturers have on foreign parts.
Take cars again as an example. Ford, for instance, imports materials and components from across the world, especially Canada and Mexico, but also, notably, China, Japan, and Germany.
Just about everything you can point to on a Ford F-150 is made in some way abroad:
In line with the United States-Mexico-Canada Agreement (established by the Trump administration in 2020) automobile manufacturing has been distributed across North America; it is not unusual for parts to cross borders between Mexico, Canada, and the USA multiple times before final assembly.
Tariffs on parts imported by American manufacturers will inevitably cause prices of American-made goods to increase.
4. In almost any scenario, tariffs will cause inflation to increase substantially this year
Using the Tesla Model 3 and Ford F-150 as examples, we can see how the proposed tariffs will force price increases. In January, tariffs on their imported parts were minimal, a mere 3% of their retail price.
Whichever tariff regime is ultimately implemented — the “Liberation Day” April tariffs, subsequent superseding May tariffs, or the FutureSearch tariff forecast — manufacturing costs will increase by 10-20% of today’s retail price.
In the case of the F-150, while both tariffs and configuration prices are variable, we can estimate an average cost increase of roughly $6,000 per truck. Ford’s current F-150 profits, which are the vast majority of Ford’s profits, are thought to be roughly $10,000 per truck. It is hard to imagine a profit-seeking company such as Ford absorbing those costs and letting its income plummet.
Generalized across the economy, even if manufacturers are willing to eat half of the tariff costs, retail prices—and therefore inflation—will increase substantially.
Want this calculation done for another product or company affecting your business or portfolio? Please request a report. We’d love to hear from you.
Appendix: Data & Assumptions
The full bill of materials, their countries of origin, and their component prices are not public information for Ford or Tesla, despite them being public companies.
Even researching every tariff as it applied to every of ~hundreds of components, we had to make simplifying assumptions:
If an American manufacturer imported a good from another American manufacturer, we didn’t take into account that supplier could also have higher costs. (So the increases here should be an under-estimate.)
Tesla Model 3’s are almost entirely manufactured from raw materials in the US, compared to Ford F-150’s which import many completed components. Estimating the costs of raw materials is harder than finished components, adding more uncertainty to our Tesla Model 3 estimates.
Some components are not entirely imported by one country. We picked the country that the majority of cost comes from when applying tariffs.
Tariffs are extraordinarily complicated. We concluded that Section 301, IEEPA, Section 232, and NTR / MFN were the critical ones, and we didn’t consider other niche ones.
| Tariff contribution to monthly lease payment for F‑150 by country | ||||
|---|---|---|---|---|
| Jan 2025 | April 2025 | May 2025 | FS scenario | |
| Japan | $0.24 | $1.22 | $2.69 | $2.69 |
| Mexico | $0.00 | $0.00 | $0.00 | $34.82 |
| China | $19.84 | $135.47 | $53.20 | $53.69 |
| Germany | $0.70 | $3.59 | $7.29 | $7.71 |
| Sweden | $0.57 | $2.87 | $6.31 | $6.31 |
| Canada | $0.00 | $12.91 | $12.91 | $13.48 |
| Israel | $0.15 | $0.70 | $1.53 | $1.55 |
| Poland | $0.47 | $2.23 | $4.87 | $4.92 |
| Taiwan | $0.00 | $0.00 | $2.87 | $2.87 |
| Thailand | $0.55 | $2.21 | $4.70 | $4.70 |
| Total Tariff Costs for F‑150 by Country | ||||
|---|---|---|---|---|
| Jan 2025 | April 2025 | May 2025 | FS scenario | |
| Japan | $14.38 | $71.88 | $158.13 | $158.13 |
| Mexico | 0 | $0.00 | $0.00 | $2,049.38 |
| China | 1167.70116 | $7,972.30 | $3,130.46 | $3,159.31 |
| Germany | 41.479 | $211.38 | $428.88 | $453.78 |
| Sweden | 33.75 | $168.75 | $371.25 | $371.25 |
| Canada | 0 | $759.48 | $759.48 | $793.23 |
| Israel | 8.775 | $41.28 | $90.03 | $91.00 |
| Poland | 27.9432 | $131.44 | $286.68 | $289.78 |
| Taiwan | 0 | $0.00 | $168.75 | $168.75 |
| Thailand | 32.221 | $129.91 | $276.43 | $276.43 |
| Total Tariff contribution for Tesla Model 3 monthly lease payment by country | ||||
|---|---|---|---|---|
| Jan 2025 | April 2025 | May 2025 | FS scenario | |
| Taiwan | $0.32 | $2.23 | $2.23 | $9.00 |
| China | $64.84 | $430.29 | $179.11 | $182.73 |
| South Korea | $3.19 | $27.65 | $28.05 | $28.05 |
| Japan | $4.71 | $15.93 | $37.94 | $38.00 |
| Democratic Republic of Congo | $0.00 | $0.21 | $0.23 | $0.23 |
| Indonesia | $0.39 | $1.81 | $1.81 | $4.81 |
| Australia | $0.59 | $3.40 | $3.40 | $3.40 |
| Germany | $0.52 | $1.10 | $1.97 | $1.97 |
| Total Tariff Costs for Tesla Model 3 by country | ||||
|---|---|---|---|---|
| Jan 2025 | April 2025 | May 2025 | FS scenario | |
| Taiwan | $19.04 | $131.04 | $131.04 | $529.79 |
| China | $3,815.96 | $25,322.04 | $10,540.51 | $10,753.53 |
| South Korea | $187.71 | $1,627.12 | $1,650.59 | $1,650.59 |
| Japan | $276.90 | $937.27 | $2,232.64 | $2,236.45 |
| Democratic Republic of Congo | $0.12 | $12.26 | $13.48 | $13.48 |
| Indonesia | $23.01 | $106.46 | $106.46 | $283.32 |
| Australia | $34.56 | $200.05 | $200.05 | $200.05 |
| Germany | $30.62 | $64.64 | $115.67 | $115.67 |
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