Considering a car purchase? Be prepared for potential price hikes due to tariffs. New vehicle costs might surge by $4,000 or more, and used cars could also see price increases. This situation is causing concern among consumers.
Car buying is particularly tricky this year. President Trump's proposed 25% tariffs on imports from Canada and Mexico could significantly impact the auto industry, which relies heavily on cross-border supply chains. Although these tariffs are on hold until April, a different set of tariffs on steel and aluminum imports has already been implemented, affecting car manufacturers.
The American auto industry is experiencing significant disruption, making the market challenging for buyers who are already dealing with high vehicle prices and costly loans. If the postponed tariffs are enforced, new car prices could rise by $4,000 to $10,000, with electric vehicles potentially seeing even larger increases, according to Anderson Economic Group. Current new car prices are around $45,000 to $48,000, depending on the source.
"It's a challenging time for both consumers and manufacturers," said Patrick Anderson, CEO of Anderson Economic Group. The impact of tariffs will vary by model, as some cars depend more on imported parts. Instead of drastically raising prices on specific models, the industry might distribute the increases across all vehicles, according to Tyson Jominy from J.D. Power. Anderson noted that manufacturers might reduce production of models that become too expensive.
Uncertainty looms over whether the delayed tariffs will be enacted and for how long. "We really don't know," said Joseph Yoon from Edmunds.com. If you're not currently planning to buy a car, there's no need to rush. Purchasing a car is a significant investment, so it's crucial to research and choose a model that suits your needs and budget. "Avoid panic-buying a car priced at $47,000," he advised.