Holding out for a bargain on your next car purchase or a major repair? Don’t, experts say.
President Donald Trump’s 25% tariffs on steel and aluminum took hold last week, and the monthlong reprieve he offered U.S. automakers from his 25% tariffs on imports from Mexico and Canada ends April 2, threatening to drive up costs for vehicles and auto parts in coming weeks.
“There is no way you’re going to see a better discount if you wait three months,” said Ivan Drury, director of insights at Edmunds. “That’s guaranteed.”
Concerns about imminent price hikes come just as the auto market shows signs of stabilizing. The latest consumer price index showed new vehicle costs down 0.3% last month from the year before and those for used cars and trucks 0.8% higher over the same period — both far lower than the 2.8% annual inflation rate overall.
Those trends aren’t likely to last, analysts warn. Tariffs are expected to drive up auto costs by $4,000 to as much as $12,500 depending on vehicle, engine type and country of origin, according to the Anderson Economic Group, a consultancy that represents automakers and dealers.
It isn’t just U.S. car brands like those made by Ford, General Motors or Jeep producer Stellantis that are set to be affected, the group said. Honda, Toyota, Audi and BMW are among the foreign automakers with extensive production in North America that could raise prices, too.
“We’re potentially undermining one of the most important elements of the U.S. economy, which is our ability to manufacture products in the United States using parts from Canada [and] Mexico,” Patrick Anderson, the firm’s CEO and founder, said of White House trade policies. It remains to be seen whether tariffs “end up causing more damage than benefit,” he said, but already, “we’ve rattled consumers.”
A White House spokesperson didn’t immediately respond to a request for comment.
Many drivers are already stressed about potential car purchases. The share of consumers who expect to be rejected for auto loans hit 33.5% in the latest New York Federal Reserve survey, the highest in its 12-year history. People in the market for new North American-built vehicles could also face an availability crunch, experts say. A recent forecast from S&P Global Mobility predicted regional production could drop by as much as 20,000 units per day within a week of the Canada and Mexico tariffs’ taking effect.
“If you have a tariff situation that changes your inputs in the vehicle, you’re naturally going to want to find that mix — between the vehicle content that is most appealing to consumers and knowing that it’s going to cost them more,” said Stephanie Brinley, an automotive analyst at S&P Global Mobility. For automakers, she said, the question is: “How do you protect margins, and how do you work through that?”
Many of the perks available to prospective buyers could dry up soon, experts said, as manufacturers and dealerships start trimming rebates, financing promotions and other offers as they look to offset higher costs.
“You could even see incentives being pulled back, like a $3,000 cash back offer that could go away immediately, overnight,” Drury said.
He and Anderson both said they expect used vehicles’ price to rise, as well, in part because auto lessees wary of purchasing tariff-inflated vehicles will hold on to their leased wheels for longer. While that would boost the values of well-maintained vehicles already on the road, it would also tighten up used vehicle inventories, Drury said, potentially re-creating the lopsided pandemic-era market.
There’s not much U.S. consumers can do to mitigate the ripple effects, industry analysts said, given the broad-based nature of the tariffs and the chill they threaten to create among automakers. But it will help to know where your vehicle is made and which components are imported versus manufactured stateside, Drury said. He suggested consumers keep on hand the American Automobile Labeling Act report, a document the Transportation Department publishes annually that lists every vehicle model along with the origins of its composition.
“It should give somewhat of a guidance, because you cannot assume the badge on the hood matches your expectation [of] where it’s made,” Drury said. “There’s no vehicle where every single component is manufactured from the ground up in the United States.”
Brinley cautioned consumers against trying to “game” tariffs by compromising on what they actually need. While trade duties are widely expected to fuel price hikes throughout the auto market, completely rewriting your goals for such an important purchase could end up costing more, she said.
“Buying something that doesn’t fit your life, is the wrong size and doesn’t work for you because you perceive the tariff impacts to be lower may not actually improve your life,” Brinley said.
You may need to adjust your budget, but “in some ways,” she said, “shop as you always have.”
