Dealers anticipating pricier inventory may reduce discounts on existing stock, driving up costs before tariff-impacted vehicles even arrive
Analysts estimate US car prices could rise between $5,000 and $15,000 in the next few weeks if President Donald Trump’s 25% tariffs on imported auto parts and vehicles go into effect on April 3.
Why?
Most cars sold in the country aren’t 100% made in America. One of the largest auto employers, the Big Three: Ford, General Motors and Stellantis, rely on neighboring Canada and Mexico for either car parts or assembly.
Even Trump’s close ally Elon Musk’s Tesla EVs, produced entirely in the US, rely on battery imports from China’s CATL and auto parts from Mexico, Japan and South Korea.
Stock market reaction
GM’s shares dropped over 7% on Thursday. Several Asian automarkers’ stocks fell, too.
Japan’s Toyota, Honda and Mazda Motor shares fell 4.29%, 4.24% and 3.99%, respectively. Nissan and Mitsubishi Motor’s stock declined by over 1.5%.
What may happen?
Dealers anticipating pricier inventory may reduce discounts on existing stock, driving up costs before tariff-impacted vehicles even arrive.
Supply could also plummet. Jonathan Smoke, chief economist for Cox Automotive, projects a 30% drop in North American production, or 20,000 fewer vehicles per day, as automakers scale back manufacturing to observe if President Trump’s tariffs will be short-lived.
Analysts estimate production costs could rise anywhere from $3,500 to $12,000 per vehicle, and if supply dwindles, expect fewer discounts at dealerships.