President Donald Trump’s latest trade move is hitting the gas pedal on car sales. With a 25% tariff on imported vehicles and parts set to take effect, buyers are racing to dealerships to lock in prices before they climb.
Some industry experts say it could add thousands of dollars to the cost of a new car, prompting a last-minute shopping spree.
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A Toyota (NYSE:TM) dealership in Walnut Creek, California told KKGO-TV selling 70 cars over the weekend, as customers hurried to make a purchase before the tariffs kicked in. The dealership’s general manager, Irina Ellis, said, “Now is the time for these consumers to be out here looking for vehicles before any price changes take effect.”
According to Marketwatch, Wedbush Securities analyst Dan Ives estimates new car prices could rise by $5,000 and $15,000. However, the exact amount would depend on the model and brand.
Fears of significant price hikes fuel the urgency. Like many auto industry experts, Ives expects prices on some models to surge. Ives told Bloomberg while referencing the tariffs, “It would be a back breaker for the auto industry globally.”
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According to Kelley Blue Book, the average transaction price of a new vehicle in July was $48,401. Reuters reports that auto tariffs would increase car prices by an estimated $2,000 to $4,000 over the next 6 to 12 months, as automakers pass on higher import and production costs to consumers.
Used car prices aren’t safe either—dealers predict they’ll rise as new car inventories shrink. CarEdge co-founder Ray Shefska predicts that tariffs will impact the used car market if they continue for an extended period. If they drive new car prices higher, more buyers will pivot to the used car market. Higher demand for used cars would naturally drive prices higher.
Beyond sticker shock, automakers are bracing for higher production costs, which could impact jobs and supply chains. The manufacturing hubs of Michigan, Ontario and Mexico may see layoffs as companies adjust to the new economic reality.
