New automotive tariffs are beginning to take effect in April and May. While some anxious buyers are rushing to dealerships to make a purchase, buying today may not necessarily ensure a good deal, several experts said.
Prices for new and used cars have been surging since 2019. U.S. tariffs on auto imports have added a new source of pressure on an already difficult market. Some experts argue that prices will inevitably rise, while others suggest a more cautious approach.
One auto market observer told The Epoch Times that buyers fearful of price hikes shouldn’t make a purchase based on emotions.
Karl Brauer, an executive analyst at car search engine and price aggregation service iSeeCars.com, said in an email that automakers and dealers are both “playing up the potential price increases to increase sales in the near term.”
“Even they don’t know exactly how tariffs will play out in their pricing structure,” Brauer said. “While higher future vehicle prices are possible, they are not guaranteed, and buyers should never be driven by fear or intimidation.”
Charles Benoit, a trade counsel at the Coalition for a Prosperous America, predicts that if the tariffs are successful in driving production back to the United States and pushing consumers to buy American, the increased production capacity will lower automotive prices.
Recent sales data show that consumers are nonetheless more than a little spooked about the potential impacts of a 25 percent tariff on completed automobiles enacted in April.
Through the first week of April, new vehicle sales are up by 22 percent compared with the same time in 2024, according to data shared by Cox Automotive chief economist Jonathan Smoke.
Used car sales in that timeframe are up by 12 percent, he said.
In an April 16 presentation, Smoke said those purchases were likely driven by consumers wanting to beat any tariff-related price hikes. Cox data indicated that the activity was driving down the available supply of both new and used vehicles on dealer lots across America.
According to Cox inventory data, foreign brands such as Lexus, Toyota, Honda, and Subaru were selling the fastest, while the American brands Lincoln, Dodge, and Ram took the longest to sell.
Bringing Back Production
President Donald Trump, whose administration has imposed new tariffs to boost domestic industries, said on April 2 at the White House that the automotive tariffs are necessary. In his speech, Trump said the tariffs will counteract actions by foreign nations that have “devastated our industrial base and put our national security at risk.”
With a wave of nation-specific reciprocal tariffs on hold, Trump and his Cabinet have suggested they are willing to negotiate to secure more favorable bilateral trade agreements and other concessions. On April 23, White House officials confirmed to The Epoch Times that the Trump administration is considering potential tariff exemptions for some automakers, but did not provide any specific details about those policy shifts.
Benoit told The Epoch Times that the Trump administration’s actions shouldn’t have been a surprise. Rather, the first Trump administration recommended assessing a similar tariff on finished vehicles in 2019.
Right now, Benoit said, imported automobiles account for more than half of the American car market. U.S. trade policy has allowed this proliferation of imports while other countries are buying an insignificant amount of American vehicles. Automotive factories, he said, are running at less than 60 percent capacity.
In 2024, according to sales data published by Car and Driver, six of the top 25 top-selling cars in the United States were models made by U.S.-based companies.
If the tariffs are successful at attracting production to the United States, Benoit expects consumer prices to fall.
He said the tariffs are already reaping benefits in the automotive sector. Foreign auto companies are adjusting their plans to move production to the United States or dial back foreign production.
Most recently, Honda Motor Co., the second-largest Japanese automaker, said on April 16 it will only make a five-door Civic hybrid model in Indiana rather than produce it in Japan and the United States.
On April 4, Stellantis NV, a Dutch company that makes Dodge, Chrysler, Jeep, and Ram models, said it was temporarily idling plants in Mexico and Canada as it assessed the impact of the tariffs. Stellantis also announced it will temporarily lay off 900 workers in Michigan and Indiana.
Brauer said all automakers can quickly add production capacity by simply adding another shift to their U.S. facilities, but the overhaul needed to fully address the changes demanded by the new tariff schedule could take years.
“When tariffs change abruptly with little warning, it’s tough for all the automakers,” Brauer said. “They just can’t react quickly when that happens.”
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