How will tariffs impact car prices?
Experts say the new 25% import tax on foreign-made cars will result in higher sticker prices overall, including for used vehicles.
"We anticipate cars impacted by this, prices that are impacted by this will likely see a 15-20% increase in price. Vehicles that aren't directly impacted by this may be 5% off the bat just from rising demand and used car prices we expect to go up as well," said Erin Keating, executive analyst with Cox Automotive.
That could translate to an average increase of $6,000 for imported vehicles and $3,600 for locally made vehicles — plus an extra $300 to $500 due to tariffs on steel and aluminum, Cox estimates.
Even cars already on ships or trains got hit with price hikes as soon as they reached port, with buyers asked to cough up thousands more than originally quoted. An ABC7 reporter was told her own order would go up by as much as $5,000 to $10,000.
Trump has framed tariffs as a way to bring back American jobs and reduce trade deficits.
"If you make your car in the United States, you’re going to make a lot of money. If you don’t, you’re going to have to probably come to the United States, because if you make your car in the United States, there is no tariff,” Trump said in an interview with NBC.
While the moves have already shut down factories in Canada and Mexico, U.S. workers who supplied parts for those factories are being laid off as a result. And vehicles made locally will soon be affected by the coming tariffs on imported car parts.
Even if the industry is able to adjust, experts warn that price increases may be permanent.
"Once you let that genie out of the bottle, it's virtually impossible to pull it back," said Keating.
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Find the best rate for youHow to budget for price increases when car shopping
If you're worried about getting priced out of the car market, here are a few smart strategies to manage the new normal:
Consider buying used cars
Used car prices are expected to rise, but they’re still likely to be cheaper than new models hit with full tariff increases. Models that are already on lots or were assembled before the tariffs took effect may offer the best deals in the near term.
Delay the purchase for a few months
Nothing is certain, but if you can wait a few months, you may avoid buying during peak demand. Tariff policies are volatile and may shift again depending on public and industry pressure.
Fix your current vehicle
Investing in repairs or routine maintenance may be more cost-effective than trading in your car right now. Even big-ticket repairs could cost less than the inflated price of a new vehicle.
Shop around for better rates
Interest rates are still relatively high, but some lenders may offer promotional deals or financing options that can soften the blow of higher prices. Compare offers from credit unions, banks and dealer financing.
Look for other ways to cut costs
If you do decide to buy, try to offset the cost by trimming other expenses. Shop around for cheaper car insurance, ditch non-essential monthly subscriptions or refinance other debt to free up room in your budget.
People who shop around for auto refinance rates can save up to $5,198 on average.
With interest rates coming down, you can save substantially by refinancing your car loan at a lower rate. According to a report published by LendingTree, people who shop around for rates can save up to $5,198 on average. You can compare auto loan refinance rates offered by lenders near you through LendingTree. Click here to compare offers now.
