What to Expect as Tariffs Reach Cars
An interview with Brian Moody, senior editor of Kelley Blue Book, a resource for vehicle valuations and other automotive information.
In early April, 25% tariffs took effect on imported automobiles. What do you expect these tariffs to do to car prices?
Tariffs could certainly make car prices go up. But we don’t know by exactly how much, because it could vary from manufacturer to manufacturer. And within one manufacturer, it will vary from car model to car model.
We estimate that the price increase on many cars could be anywhere from 3% to 25%. We expect that 40% of cars with prices of less than $40,000 will face a direct impact, meaning there’d be no way to avoid a price increase on 40% of cars with prices under $40,000.
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Will this affect only cars built outside the U.S.?
Most cars today are full of parts that have come from outside the U.S. So even if a vehicle is assembled here, other countries may produce the parts, which are also subject to tariffs.
Additionally, it’s very likely that manufacturers are going to spread out the price increases across all models, regardless of whether the cars were 100% built within the U.S. This is to avoid a dramatic impact on consumers.
How soon could prices rise?
I would guess May or June, but we don’t know. It will depend on some big factors, including demand, how the tariffs are applied and how much inventory is already in the U.S.
What advice do you have for new-car buyers?
If you’re in the market for a new car, speeding up the research process so that you can make a purchase sooner rather than later would be a wise thing to do.
Start looking into what you can afford, what’s available and what features you may want in a new car.
But I wouldn’t rush to make a major purchase based on news headlines, because things are changing more rapidly than usual.
What about used cars?
Something to keep in mind is that used-car prices are going to follow new-car prices. For context, about four or five years ago, during COVID, car manufacturers were building fewer cars because they thought there wouldn’t be demand for them.
As a result, there are now fewer used cars in the marketplace than there would be if manufacturers had maintained their output. Because of this reduced inventory, prices of used cars were already going to go up from about this time into 2026, no matter who’s president.
However, if demand increases on an already-low inventory, that could further push up used-car prices.
Will the cost of vehicle repairs go up, too?
Tariffs of 25% (took effect) on imported auto parts on May 3. Whether — and how much — repair costs rise depends on where the replacement parts are coming from and the cost of the parts to begin with.
We’re guessing that prices may go up on certain parts, such as engines, transmissions and powertrain and electrical components, with the possibility that price increases may expand to additional parts, too.
These increases would drive down demand and drive up supply. So plenty of those parts may be available if you want to pay up, but there could also be a pause in availability while suppliers figure out a pricing strategy that keeps them in business.
I would be more worried about long waits for repairs if suppliers delay shipping out parts while they determine their strategy. Or they may direct parts to higher-profit customers, which would likely be new-car manufacturers.
So if your car is due for maintenance soon, it might make sense to act now rather than wait.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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