New York (CNN) — President-elect Donald Trump has pledged to protect American-made cars by imposing high tariffs on imports. The problem is that there is no such thing as an all-American car.

Trump promised that tariffs, which are a tax on goods imported from another country, would be a key part of his economic plan during his second term. On Monday, he announced his intention to impose a tariff of 25% on all goods coming from Mexico or Canada from his first day in office.

The U.S. government tracks the percentage of parts in each car that are manufactured “domestically.” But under current trade law, parts made in Canada and parts made in the United States are counted as the same domestic content. Even with the broader definition of “American made,” none exceed 75 percent.

This is why automobile prices could rise sharply if Trump pursues his plan to impose high customs duties on parts used in the composition of “American” vehicles found in showrooms across the country. The automotive industry’s supply chain depends on parts and materials sourced from around the world – from relatively inexpensive nuts and bolts, which are cheaper to buy from foreign producers, to computer chips and other expensive electronic components that are not manufactured in sufficient quantities in American factories. respond to the request.

But despite its claim that tariffs are paid by the foreign country, they are in fact paid by whoever buys the imported product, and American companies almost always pass on most – if not all – of this cost to the consumers.

Changing the way American cars are built

The North American auto industry has operated for decades as if the continent were one giant country, thanks to free trade deals signed by presidents from Bill Clinton to Trump himself. Parts and entire vehicles crossed borders freely, sometimes multiple times, before arriving at a U.S. dealership.

But Trump promises to change that. Due to the threat of tariffs on Canadian and Mexican exports to the United States, shares of most automakers fell Tuesday, with GM closing down 9%, Ford down 3%, Stellantis, the manufacturer of cars under the Jeep, Ram, Dodge and Chrysler brands, down 6%. Additionally, Toyota closed 2% lower in the U.S. and Honda fell 3%.

Trump’s plans to spill THE United States-Mexico-Canada Agreementor USMCA, the three-country trade agreement he negotiated. Mexico and Canada are two of the United States’ largest trading partners and are currently exempt from most tariffs under the USMCA, but this could change.

And it’s not just tariffs on goods from Mexico and Canada that are causing concern. Trump’s promise to raise tariffs by an additional 10% over existing measures could also make many cars more expensive. Although China ships relatively few cars to the United States, it is a major source of low-cost auto parts.

Trump says the move would bring jobs back to the United States by forcing manufacturers to close factories in other countries and open or expand factories in the United States. But the quantity of parts that go into cars assembled here would be difficult for U.S. suppliers to replace, making it much more expensive to build a car in U.S. auto plants.

Only two affected vehicles are considered 75% American-made by the US government: the Tesla Model 3 and the Honda Ridgeline, a pickup assembled at a Honda factory in Lincoln, Alabama. And again, that 75% includes any content currently originating from Canada that may be subject to new rates.

Almost all vehicles with 50% or more of their content from U.S. or Canadian suppliers are either built by Tesla or by brands that are ostensibly “foreign” but actually assemble cars here – Honda, Hyundai, Kia, Nissan, Mazda ,Subaru. and Toyota.

The Ford F-150, the most popular vehicle in the United States for more than 40 years, has the most domestic content of any vehicle made by one of the traditional “Big Three” automakers. While all the parts are assembled in a van in Michigan or Missouri, only 45% of them parts come from American or Canadian factories. Most of the larger versions of its engines come from Mexico.

“Yes, it’s an American truck, assembled in America, but not with American parts,” Ivan Drury, director of research at Edmunds, told CNN.

Household parts might be hard to find

It would be difficult to find domestic supplies for many imported auto parts. Even if some is manufactured here, there is not enough excess capacity to replace the production of the parts are now imported. And for some of the cheapest products, it is not profitable to make them in American factories, paying American wages. It would be more economical to pay the tariffs and pass the cost on to car buyers.

Even if an American supply of parts could be found, in most cases it would cost more. The low price of imports is why automakers turned to these products in the first place.

And spending time and money building new factories, assuming suppliers are willing and able to do so, would pose its own challenges. Take for example the multitude of computer chips in modern cars that control everything from fuel economy to windshield wipers. lumbar support and heated seats. The CHIPS Act of 2022 approved $39 billion to support the construction of 16 semiconductor factories in the United States. But even with all that money, building new factories can take three to five years.

Even modernizing and expanding existing U.S. chip factories, which would be needed to meet increased domestic demand if imported chips became more expensive due to tariffs, could take a year or more. A New York factory currently undergoing expansion is expected to take 10 years to fully reach its additional production levels.

Tariffs would increase the cost of assembling vehicles in U.S. factories. And this increase in costs would certainly hit car buyers who already spend nearly $50,000 for each new vehicle purchased here.

“These costs… will not be absorbed by the automakers or suppliers,” Jeff Schuster, global vice president of automotive research at consultant GlobalData, told CNN.

The automakers had no comment when asked about their plans and the price impact of the new tariffs when contacted by CNN.

Tariffs on imported cars would likely raise all prices

Even if Trump scrapped his tariff plans and only imposed tariffs on fully assembled cars imported into the United States, he would raise the price of cars built here, let alone those imports.

During the campaign, he pledged to impose tariffs of 100 to 200 percent on vehicles built in Mexico, saying it was vital to protect jobs in the U.S. auto sector, although he did not made no reference to these plans in Monday’s announcement. This would double or triple the cost of these cars, likely killing all demand. He predicted there would be a “bloodbath” in the U.S. auto industry and auto jobs if his tariff plans were not imposed.

If tariffs actually raise the price of vehicles assembled in Mexico, like the Chevrolet Blazer or Honda HR-V, and then exclude them from the market, automakers could decide to stop offering them altogether rather than build them in American factories. Cars built in Mexico are most often cheaper, less profitable models, which can only maintain profitability by being built with cheaper Mexican labor.

But it’s not just the smaller entry-level models built in Mexico that could see price hikes. The tariffs could impact many car models that buyers don’t realize are imported, such as heavy-duty versions of Ram pickup trucks, which are built at a Stellantis factory in Saltillo, Mexico. Some versions of the Chevrolet Silverado are also built in Mexico. Even if automakers shifted production of these most profitable vehicles from Mexico to U.S. factories, it would take years to make the shift.

Fewer imported cars would raise all prices

Tariffs on imported vehicles would likely also lead to higher prices on cars assembled here, as it would limit the supply of vehicles in the U.S. market.

When supply is limited and demand remains strong, it often results in rapid price increases, which occurred in 2021 and early 2022 when a shortage of computer chips and other parts severely restricted production across the sector. Almost all car buyers were suddenly paying more than sticker price for the first time, and average prices skyrocketed.

And higher import prices would mean less competition for automakers that make cars and trucks in U.S. factories, giving them the ability to charge more to increase profits — without necessarily hiring more workers. U.S. automakers have used their big profits in recent years to buy back their shares worth billions of dollars to prop up their stock prices, even as they were. laying off workers and slowing or reducing production in some cases.

“This will have a ripple effect across the entire market and trickle down to all vehicles,” Drury said. “You will also disrupt the used car market.”

The exact impact will be difficult to determine until the final version details of Trump’s tariff plans spelled out. During his first term, there were numerous threats of tariffs, but they never came to fruition. Drury said some of the tariff talk from the campaign trail might not happen this time either. If they do, it will have a huge impact on car buyers.

“There are all these potential car buyers who have resisted because of the high prices,” Drury said. “If these tariffs are put in place, it could harm the industry. I hope that for the car buying public, nothing is as aggressive as advertised.