Prices on all vehicles ‘will undoubtedly go up’ after Trump auto tariffs, experts say

President Donald Trump’s new tariff on automobiles has a clear loser: the American consumer, experts said.

On March 26, Trump imposed a 25% tariff on imported vehicles, including passenger vehicles and light trucks. Certain parts, such as engines and electrical components, will also be affected.

“We start off with a 2.5% base, which is what we were at, and we go to 25%,” Trump said at an Oval Office press conference.

As a result, Americans should expect to pay more not just for foreign vehicles — like Toyota, Honda and BMW — but also for U.S.-made and even used vehicles, according to automobile experts.

“Prices for all vehicles in the U.S. will undoubtedly go up from these tariffs ... How much they will climb is uncertain, but the direction is most certainly going up,” John Helveston, a professor of engineering management at George Washington University, told McClatchy News.

Imported vehicles

A White House fact sheet indicated the Trump administration expects any price increases to be “temporary” and “very minor.”

But, experts say the sticker price on foreign-made vehicles could go up significantly, probably by thousands of dollars.

“The price of imported vehicles will likely rise by 25%,” Chris Douglas, a professor of economics at the University of Michigan-Flint, told McClatchy News. “A tariff is a tax, so a tariff levied to imported vehicles will be passed-through to consumers.”

So, for example, a Honda Civic that now costs about $24,000 could soon cost $30,000.

However, Trump stipulated that vehicles imported under the United States-Mexico-Canada Agreement (USMCA) will be able to apply for exemptions from the tariff, but only on their U.S-produced content. So, a car manufactured in Canada or Mexico with 30% U.S.-made content would still be slapped with a 25% tariff on 70% of its value.

But, sorting out exactly what percentage will be subject to the tariff will be extremely burdensome, Frank DuBois, a professor of international business at American University, told McClatchy News.

“Parts, components and subassemblies might pass back and forth across national borders several times before being assembled into a vehicle,” DuBois said. “No doubt the issues of separating US content from other content is that much more difficult.”

Helveston echoed this, saying “Thousands of car parts are traded across multiple borders before they end up in a vehicle assembled in the U.S.”

Other vehicles

Other vehicles will also experience price hikes, including domestically-made cars, such as those produced by Ford and GM.

“U.S. made vehicles are likely to see a price increase for a few reasons,” Douglas said.

For one, they source many of their parts from abroad, some of which would be subject to Trump’s auto tariff.

For example, in 2024, nearly half of the content used to make Ford and GM vehicles, 46%, was foreign-sourced, according to American University’s Made in America Auto Index, which is run by DuBois.

Separately, Trump has also levied a 25% tariff on imported steel and aluminum, both of which are used to make domestic vehicles, Douglas said.

“So, if domestic automakers are not exempt from these tariffs, this higher production cost will be passed-through to consumers via a higher price,” he said.

Additionally, the auto tariffs will likely push more Americans to purchase U.S.-manufactured vehicles — meaning, based on the laws of supply and demand, they will go up in price.

“Essentially, the tariff gives domestic automakers the ability to raise their prices as well,” Douglas said.

Trump reportedly told CEOs of U.S. automakers in early March not to raise their prices as a result of his tariffs, according to the Wall Street Journal. This demand “baffled” one executive.

“The math would tell you, that’s going to cost us multibillions of dollars,” they told the outlet. “So who pays for that?”

But, vehicles fresh off the lot — foreign-made or otherwise — won’t be the only ones affected by Trump’s tariffs.

“Consumers who might otherwise have purchased a new vehicle may drive their vehicle for longer in response to new vehicle prices rising,” Douglas said. “Thus, used cars that otherwise would have hit the used car market will stay off the market, which will increase used car prices.”

Will tariffs bring back domestic manufacturing?

The upside of this turbulence, according to the White House, is that it will lead to a resurgence of domestic manufacturing, which has withered in recent decades.

“Today, only about half of the vehicles sold in the United States are manufactured domestically, a decline that jeopardizes our domestic industrial base and national security,” the White House said, claiming that Trump’s tariffs would help reverse this trend.

But, experts disagree, arguing protectionism is unlikely to restore America’s manufacturing base — for several reasons.

For one, the U.S. auto industry relies heavily on global supply chains.

“The automotive supply chain is probably one of the longest of any product,” DuBois said. “For some components there may be few options to source locally.”

And constructing new factories to produce vehicles in-house would take years, he said.

Additionally, even if auto manufacturing were to be reshored, it would not boost employment in the industry to its former height.

“Auto manufacturing will never be the source of employment that it once was due to technological improvements in manufacturing,” Douglas said. “Work that was done by humans in the 1950s and 1960s is now automated using computers and robots. That is never going to change.”

This story was originally published March 28, 2025 at 10:17 AM with the headline "Prices on all vehicles ‘will undoubtedly go up’ after Trump auto tariffs, experts say."