Are you reaching out bargains for your next car purchase or major repairs? Experts say.
President Donald Trump’s 25% steel and aluminum tariffs settled last week, ending on April 2nd on US automakers from a 25% tariff on imports from Mexico and Canada, threatening to raise the costs of vehicles and auto parts in the coming weeks.
“If you wait three months, there’s no way to see a better discount,” said Ivan Drury, director of Insights at Edmunds. “That’s guaranteed.”
Concerns about impending price hiking arise just as the car market shows signs of stabilization. The latest consumer price index shows that the costs of new vehicles have decreased by 0.3% from the previous year, while the costs of used cars and trucks over the same period are 0.8% higher.
These trends are unlikely to continue, analysts warn. Tariffs are expected to increase car costs to $12,500 to $4,000, depending on the vehicle, engine type and country of origin, according to Anderson Economic Group, a consultancy representing automakers and dealers.
It’s not just American car brands like Ford, General Motors or Jeep producer Stellantis. Honda, Toyota, Audi and BMW are among the foreign automakers that produce large-scale production in North America, which can raise prices.
“We could undermine one of the most important elements of the US economy: the ability to manufacture products in the US using Canadian (and Mexican parts),” said Patrick Anderson, the company’s CEO and founder, about the White House trade policy. He said that it remains to be seen whether tariffs will “cause more damage than profits,” but that “we are rattling consumers.”
A White House spokesman did not immediately respond to requests for comment.
Many drivers have already highlighted the potential car purchases. The share of consumers expected to be rejected for car loans reached 33.5% in the New York Federal Reserve Standard Survey, the highest in its 12-year history. People in the market for new North American-built vehicles could also face a crunch of availability, experts say. Recent forecasts from S&P Global Mobility suggest that regional production could drop by 20,000 units per day within a week of Canada and Mexico’s tariffs being taken into effect.
“If you have a tariff situation that changes the input of a vehicle, you’ll naturally want to find that mix. For an automaker who knows the most appealing vehicle content for consumers and the more costly,” she says, “How do you protect the margin and how do you manipulate it?”
He said many of the perks available to future buyers could soon be drained as manufacturers and dealers start trimming rebates, lending promotions and other offers, trying to offset higher costs.
“You can even see the incentive being pulled back, like a $3,000 cashback offer that could soon disappear overnight,” says Drury.
Both he and Anderson said they hope that prices for vehicles in use will rise. This expects that lessees of the car will be careful to buy a vehicle that has become tariff-infiltrated and will hold the lease wheels longer. It would already increase the value of well-maintained vehicles on the roads, but it could also replicate a biased pandemic-era market.
According to industry analysts, there is not much that our consumers can do to mitigate the ripple effect. But it helps you know where your vehicle is being made and which components are imported with the state side where they were manufactured, Drury said. He suggested that consumers have American Automobile Labeling Act reports on hand. It lists documents published annually by the Transportation Department and all vehicle models along with the origins of its composition.
“It should give some guidance, as you can’t assume that the hood badge matches where it was made,” Drury said. “No vehicle has all the components in the US manufactured from scratch.”
Brinley warned consumers not to try and “game” tariffs by compromising what they actually need. While trade operations are widely expected to encourage price hikes across the automotive market, she said that rewriting such a critical purchase goal could cost more.
“Buying something that doesn’t suit your life is the wrong size and won’t work for you because you feel like the tariffs are low,” Brinley said.
You may need to adjust your budget, but “in a way,” she said.
