New Port Fees Further Complicate U.S. Auto Market
In October 2025, the U.S. will implement a new port fee of $150 per vehicle capacity on all foreign-built car carriers entering American ports, potentially adding $1.8 billion annually to shipping costs. This policy, aimed at countering China's dominance in commercial shipbuilding, applies universally to all foreign-manufactured vessels, impacting major carriers like Wallenius Wilhelmsen and Mitsui OSK Lines.
The auto industry, already grappling with the effects of President Trump's 25% tariffs on imported vehicles and parts, faces compounded challenges. These combined measures are expected to increase the average new car price by $3,000 to $10,000, strain supply chains, and disrupt global trade dynamics. Automakers are considering production shifts and reevaluating supply chains, while consumers may face higher prices and limited vehicle availability.
Base Case Scenario – Gradual Adjustment
Probability: 55%
The auto industry and shipping firms absorb some of the port fee costs through operational efficiencies, partial price hikes, and contract renegotiations. Consumer prices rise modestly, but market fundamentals remain intact over the medium term.
Key Assumptions:
Automakers split costs with logistics providers, avoiding full pass-through to consumers.
Global trade partners voice concerns but avoid major retaliatory measures.
Demand softens slightly but stabilizes as consumers adjust expectations.
Forecast Impacts:
Average new car prices rise by $2,500–$4,000.
Light vehicle sales decline 5–7% year-over-year in 2025.
U.S. GDP impact remains marginal (<0.1% drag).
Automotive stocks recover after initial decline as pricing strategies normalize.
Upside Scenario – Strategic Realignment
Probability: 20%
The new port fee acts as a catalyst for reshoring and innovation. Domestic shipbuilding and automotive assembly expand, supported by subsidies or tax credits. Consumer backlash is muted by strong wage growth and credit availability.
Key Assumptions:
The Trump administration introduces targeted incentives to offset port fee costs.
Automakers accelerate EV and domestic production investment, reducing reliance on foreign supply chains.
Inflation continues cooling, supporting consumer resilience.
Forecast Impacts:
New car prices rise only $1,500–$2,000, partially offset by domestic sourcing gains.
U.S. light vehicle sales drop <3%, with recovery by Q2 2026.
Surge in U.S. shipbuilding demand creates 8,000–12,000 new jobs over 3 years.
Public companies in domestic logistics, shipbuilding, and EV manufacturing outperform broader indices.
Downside Scenario – Cascading Trade Retaliation
Probability: 25%
Major trade partners retaliate with tariffs or restrictions on U.S. goods, especially agricultural and tech exports. Combined cost pressures from fees and Trump's tariffs cause a sustained contraction in car sales and manufacturing employment.
Key Assumptions:
EU and Japan initiate reciprocal tariffs on U.S. exports or port surcharges.
Used car demand surges due to prohibitively high new vehicle costs.
Automakers cut production and staffing levels in North America.
Forecast Impacts:
New vehicle prices rise $5,000–$10,000, pricing many buyers out of the market.
U.S. light vehicle sales decline 10–15% in 2025, with slow recovery.
50,000–75,000 U.S. auto industry job losses possible by 2026.
Rising tensions derail WTO negotiations on broader trade reform, deepening global supply chain fragmentation.
