Trump’s expanding tariffs could cause car prices to rise as buyers rush to purchase before hikes hit the market

The anticipation of President Trump’s new 25% tariff on foreign vehicles has spurred car buyers to act fast. Consumers are flocking to dealerships, eager to make purchases before price hikes hit, potentially reversing the recent uptick in car sales. Automakers like General Motors and Hyundai reported strong sales growth in the first quarter, while others like Stellantis and Ford saw declines. With the looming tariffs, those gains could be short-lived as the new taxes take effect, causing a ripple effect in the market. Nadia Pierre-Toussaint, a buyer at Millennium Honda in Hempstead, New York, made a quick purchase, saying, "It's a good idea to buy now, down the line, it’s going to get more expensive."

The impact of these tariffs will be felt by a wide range of vehicles, not just imports. Roughly half of the 16 million cars sold in the U.S. in 2024 were imported, meaning these tariffs apply to a substantial portion of the market. Even U.S.-made cars are vulnerable, as many rely on foreign-made parts. Industry experts have noted that no car is completely free from tariff impacts, as all vehicles have some level of foreign component. As one analyst put it, "U.S.-made cars with all U.S. parts is a fictional tale." With prices expected to rise for nearly all cars, consumers may see significant price hikes—especially on foreign-made vehicles, which could increase by as much as $15,000, according to Goldman Sachs.

Dealers are already preparing for the changes, with some automakers signaling price hikes as early as Thursday. Hyundai has warned its dealers that current prices are not guaranteed and that they may face price changes starting this week. "We are rapidly evaluating the situation and will communicate to you any necessary changes to our pricing strategy," Hyundai President Randy Parker wrote in a memo. However, not all dealerships have received clear directives yet, leading to confusion. Ravel Mejia, the general manager at Millennium Honda, acknowledged that while he hasn’t seen specific price changes, he expects costs to rise with new shipments. "It’s a little bit unsettling to come in tomorrow and not know what’s going to happen," he said.

As new car prices rise due to the tariffs, the used car market could also see an increase in prices. Consumers looking to avoid the higher costs of new vehicles may turn to used cars, pushing up demand and driving prices higher. Floyd Wallace, who bought a used 2019 Honda Pilot, explained that he would have waited a month or so but decided to purchase now to avoid paying more later. “Before the storm actually drops, I want to get in and just get out,” he said. However, some consumers are more relaxed, like Michael Chen, who wasn’t immediately concerned about price increases, noting, “We’ll wait and see.”

The looming tariffs on foreign vehicles have created a sense of urgency among car buyers who want to avoid rising prices. As dealers and automakers brace for price hikes, the ripple effect could extend to both new and used car markets. While some consumers are rushing to buy now, others are waiting to see how the situation unfolds, creating uncertainty for both buyers and sellers in the coming months.