Trump Gave Auto Executives Threat On Tariffs --- CEOs fear some form of punishment if they respond to levies by raising car prices

"When President Trump convened CEOs of some of the country's top automakers for a call early this month, he issued a warning: They had better not raise car prices because of tariffs.

Trump told the executives that the White House would look unfavorably on such a move, leaving some of them rattled and worried they would face punishment if they raised prices, people with knowledge of the call said.

Instead, Trump said, they should be grateful for his elimination of what he called former President Joe Biden's electric-vehicle mandate, which involved subsidies and emissions requirements to encourage electric-car production. He made a lengthy pitch for how they would actually benefit from tariffs, two people on the call said, adding that he was bringing manufacturing back to the U.S. and was better for their industry than previous presidents.

The tariffs would be "great," Trump said, according to one of the people.

On Wednesday, Trump announced a 25% tariff on all imported vehicles and parts starting April 2, a move almost certain to force American carmakers to raise prices on customers. Most automakers depend on parts and materials from other countries to make cars, including vehicles assembled in the U.S.

"You're going to see prices going down, but going to go down specifically because they're going to buy what we're doing, incentivizing companies to -- and even countries -- companies to come into America," he said at the event.

Trump's relationship with automakers since taking office has been a rocky one, illustrating one of the challenges so far to his economic orthodoxy. The president is trying to curb inflation -- voters' cost-of-living concerns helped fuel his 2024 victory and are now one of his top vulnerabilities, experts say -- while imposing tariffs on industries such as auto manufacturing that he says will remake the U.S. trade order.

Detroit's automakers and industry suppliers in particular have made clear there is little they can do but raise prices in the face of tariffs. Bringing more factories back to the U.S. -- a tenet of Trump's tariff strategy -- can take years for car companies to make happen.

"Tariffs, at any level, cannot be offset or absorbed," Ray Scott, chief executive of parts supplier Lear, wrote in an email on Tuesday to employees that was reviewed by The Wall Street Journal. "A holistic, industrywide approach will be necessary to mitigate the impact."

For now, dealers have stockpiled a two- to three-month supply of new cars, meaning the impact of the tariffs might not start to be felt until May. At that point, vehicle prices could rise 11% to 12% to offset the tariffs, Morgan Stanley analysts said in a note on Thursday.

It is unclear what the Trump administration could do if automakers raise their prices. Trump has targeted disfavored law firms with executive orders, and automakers rely on federal regulators for critical approvals.

Inside the Trump administration, inflation has been a concern among Trump's economic team, even if he rarely addresses it publicly, three people familiar with the matter said.

"It is difficult to see how imposed tariffs over time would not have some impact on prices," said Matt Blunt, president of the American Automotive Policy Council, which represents General Motors, Jeep parent Stellantis and Ford.

Kush Desai, a Trump spokesman, said "restoring Main Street, re-establishing American manufacturing dominance and putting the American people first are the only interests guiding President Trump's decisions." The existence of the call between Trump and the auto CEOs was previously reported by the New York Times.

Concerns about rising prices have been a constant refrain from other executives who have met with Trump as they try to dissuade him from major tariffs. Oil-and-gas executives from the American Petroleum Institute have argued that tariffs could cause the price of gasoline to go up, particularly in the Midwest. Gas prices have dropped slightly since Trump took office, according to AAA.

People familiar with Trump's thinking say he is likely to impose few, if any, tariffs on the energy sector, in large part because of those concerns.

Food companies also have argued that prices would go up on products Americans love if his tariffs go forward, White House officials say.

"Trump is obviously very fond of tariffs but the American public dislikes higher prices as the 2024 election results clearly demonstrated," said Clark Packard, a tariff expert at the Cato Institute, a libertarian think tank.

For several weeks, businesses ranging from major car companies to mom-and-pop suppliers across the auto industry have been working feverishly to prepare for any fallout from Trump's tariffs.

An executive at one of the automakers said they were baffled by the desire to both impose tariffs -- but also tell car companies they couldn't raise prices.

"The math would tell you, that's going to cost us multi billions of dollars," the executive said. "So who pays for that?"

Automakers have signaled to their retailers the enormous pressure they were under. Stellantis this month said the 25% tariffs on goods from Canada and Mexico favor Asian and European rivals and sent U.S. dealers an email with talking points to share with lawmakers.

"We encourage you to contact your federal and state representatives to share your opinion on a matter that threatens to disrupt our business," read the email, which was viewed by the Journal." [1]

1.  Trump Gave Auto Executives Threat On Tariffs --- CEOs fear some form of punishment if they respond to levies by raising car prices. Dawsey, Josh; Felton, Ryan.  Wall Street Journal, Eastern edition; New York, N.Y.. 28 Mar 2025: A1.