“The sharp drop in the share of vehicles exempt from tariffs marks a turning point for North American automakers, who benefited from temporary allowances in the first half of 2025. With the end of the allowances that prevailed through May and into June of this year, automakers and suppliers are now facing the tariff-related cost increases that AEG and others noted were coming as early as January of this year.

“Tariffs hit North American automakers hard in July,” said Patrick L. Anderson, Principal & CEO of Anderson Economic Group. “The automakers made extensive use of temporary allowances that effectively allowed an exemption for the majority of both parts and vehicles through June. That changed in July for assembled vehicles, and we can expect that these costs will become embedded into the prices consumers are paying in the very near future.”

“Starting in January of this year, we stated that tariffs at this level would hit suppliers, dealers, and consumers this year,” said Anderson. “With over a billion dollars in tariff costs in just one month and for just two countries, the price shock will become impossible to ignore,” said Anderson.