Buying a car is a significant financial decision, even under normal circumstances. Now, car buyers must also navigate the complexities of U.S. tariff policies.
On Wednesday, President Trump announced a one-month delay on tariffs for U.S. automakers importing parts from Canada and Mexico. These countries supply a substantial portion of vehicle components for American manufacturers.
If the proposed 25% tariffs are implemented, car manufacturers will face increased costs, which could result in higher prices for consumers, according to industry experts.
As a result, experts suggest that those planning to buy a car in the next year should consider purchasing one earlier in 2025 rather than waiting.
If the tariffs take effect, vehicle prices could increase by anywhere from $2,000 to $12,200 for certain models, according to an estimate from Anderson Economic Group (AEG), a Michigan-based economic consulting firm.
“These are cost increases that cannot be hidden from the consumer. Substantial portions, or perhaps all of it, will be passed along to consumers, or manufacturers will stop producing them,” AEG CEO Patrick Anderson told.
The timing of the tariffs remains uncertain. President Trump may decide to delay them further, or the U.S. could abandon them altogether if a trade agreement is reached with Canada and Mexico.
Even if the tariffs go into effect in April, their duration remains unknown, adding another layer of uncertainty, according to Morningstar equity strategist David Whiston.
Some car models rely more heavily on components from Canada and Mexico than others, but automakers are expected to distribute any additional costs across their entire vehicle lineups.
“If the tariffs are here, and permanent, by the time we get to summer we’d expect to see higher prices everywhere,” Tyson Jominy, vice president of analytics at J.D. Power, told.
This means that even vehicles primarily manufactured in the U.S. with components that are not subject to tariffs could still see moderate price increases.
“If we are talking about 25% tariffs on Mexico and Canada, prices will go up, and we are expecting most automakers to peanut-butter spread the impact across their entire portfolio, even if the vehicle is built in the U.S.,” Jominy explained.
“The reality is that every automaker, regardless of where they final assemble, is likely to be affected if these parts tariffs go into effect.”
Industry experts say automakers will likely take a strategic approach when implementing price increases to minimize the impact on sales.
“Automakers will smooth costs out across their vehicle lineups,” said Jessica Caldwell, head of insights at Edmunds.
“They won’t increase one model’s price by 40%. They’ll figure out ways to spread out the costs in a way that doesn’t harm profitability as much, and doesn’t kill sales at the same time.”
While car prices won’t surge overnight if the tariffs on Canada and Mexico are imposed, they could start increasing by summer, analysts predict.
This means consumers considering a car purchase should begin their search sooner rather than later.
Automakers with ample inventory may be able to delay price hikes, whereas those with limited stock may have to incorporate the cost increases more quickly. Jominy estimates that price adjustments could take place anywhere from a few weeks to several months after the tariffs take effect.
“If you think you’ll need a car within the next several months, you should probably get into the market sooner rather than later,” Jominy advised.
However, experts caution against making impulsive decisions. Instead, they recommend that consumers conduct thorough research before committing to a purchase, given that a vehicle is a major financial investment.
“But if you’re planning to be in market the first half of year, it probably makes sense to speed up what you can and make sure you’re ready to go,” Jominy added.
When new car prices increase, some buyers shift to the used car market, which can, in turn, drive up prices for pre-owned vehicles.
“If something comes to pass on tariffs, we’d expect higher prices on both new and used vehicles,” Jominy noted.
Experts also warn that demand for cars and other tariff-impacted products could be pulled forward as consumers try to buy before prices rise.
“Because we don’t know what’s going to happen, I would be buying everything that I needed that’s an appliance that could have content coming from Canada or Mexico,” said Barry Appleton, co-director of the Center for International Law at New York Law School, in an interview.
“It’s a little bit like eating your lunch at recess. You get the same amount of food you just get it earlier,” he explained.
Since President Trump has previously changed course on tariffs, the timing and certainty of auto tariffs remain unclear.
However, Robert Handfield, a professor of supply chain management at North Carolina State University, suggests that risk-averse consumers should consider buying a car now rather than later.
“He postponed the tariffs for a month to give automakers a little breathing room,” Handfield said.
“I think it’s a good idea to buy now. You’d be able to get in under the wire and save around $4,000 for a regular sedan or up to $10,000 to $12,000 for a truck, which are significant savings.”
Even if the tariffs never materialize, consumers looking to play it safe would still benefit from purchasing their vehicles now, according to Caldwell.
“Some people don’t have the finances to get it wrong. We are stretched thin financially as a country and new vehicle prices aren’t cheap, so I can see a lot of people don’t want to take the risk,” she said.
“Sure, it might not happen. But what if it does? Now you’re paying how much more that you can’t afford.”