Car Tariffs to See Vehicle Prices Rise by Thousands: ‘Punch to the Gut’

A 25 percent tariff on all car imports to the U.S. announced by President Donald Trump on Wednesday is “quite a punch to the gut” to American companies selling foreign brands, car dealer George Glassman told WXYZ Detroit.

“The manufacturers, it’s going to cost them more money, and there’s no way I foresee them not passing those costs on to me and ultimately, the consumer,” said Glassman, who is president of Michigan-based Glassman Automotive Group.

Why It Matters

Sweeping tariffs on all cars assembled outside the U.S. and certain car parts has obtained mixed reactions from the industry.

While Detroit-based United Auto Workers, which endorsed Kamala Harris for president in 2024, has expressed strong support for the tariffs and praised the president for them, many industry experts have sounded the alarm over their potential impact on American consumers.

Their fear is that, while tariffs could encourage carmakers to open up more factories in the U.S, they are also very likely to disrupt supply chains around the world and drive up prices for Americans.

What To Know

Tariffs announced on Thursday are expected to affect half of all the cars currently sold in the U.S, Jenni Newman, Cars.com Editor in Chief, told Newsweek.

“So far, automakers have been quiet on their plans to navigate the tariffs, but should the tariffs remain in place for months, or even years, shoppers could see delays or just fewer choices from automakers as they pull back on which models they sell in the U.S,” she said.

“In the short-term, automakers could quickly see their supplies diminish as shoppers accelerate their plans to buy a particular car before the tariffs affect prices,” she added.

Glassman’s dealership sells new and used foreign cars—including Kia, Hyundai, Subaru and more. Many of the models he sells in his Detroit dealership are actually assembled in the U.S, but he is worried that prices will regardless increase across the board.

“There’s no question that having plants built in the United States is very productive. It’s a lofty goal and it’s a good goal,” he told WXYZ Detroit. “But I’m not so sure there isn’t possibly another way.”

Newsweek contacted Glassman Automotive Group for comment by email on Thursday.

Many experts share Glassman’s same fears. In a recent assessment of the impact of tariffs on Americans’ next car, website Cars.com wrote that while “proponents of tariffs want to incentivize companies to shift production to within the U.S., [ …] moving around complex supply chains takes a long time and can cost a lot of money.”

These extra costs are not typically absorbed by automakers, researchers at Cars.com said. “Instead, they usually pass the extra costs onto consumers through higher prices, or they may even discontinue certain vehicles if it no longer makes financial sense to sell them here.”

On top of that, car insurance rates across the country could go up if these companies have to pay higher prices for car parts they repair.

Newman said that, without a crystal ball, it’s difficult to say the impact on dealers. “In the short-term, dealers could see an increase in sales as shoppers move swiftly to purchase a new car, but price increases due to tariffs could cause shoppers to hold off on purchasing a new car until the market settles,” she said.

But she is sure that U.S. automakers will also be impacted by the tariffs for those vehicles that are built in Canada or Mexico. “The proclamation calls out that the tariff will only apply to the non-U.S. parts content,” she explained. “Automakers have a 90-day window to determine that parts content, but for now, these vehicles will be tariff-free.”

David Kudla, CEO and chief investment strategist at Mainstay Capital Management in Troy, told WXYZ Detroit that overall, tariffs “would result in probably, let’s say a 5 percent, 10 percent, 15 percent increase in the price of vehicles on average.”

What People Are Saying

Karl Brauer, executive analyst at iSeeCars, told Newsweek: “A 25 percent tariff will wreck the business case for the majority of vehicles imported to the U.S. Automakers will reevaluate the cost, price and profit structure of imported models to determine how to address this new tariff, with price hikes the most likely near-term response.

“Reduced profit margins or eliminating the sale of certain models are additional options an automaker might exercise if a price increase isn’t a sufficient or realistic strategy. All of these options will result in lower sales for both the automaker and its dealer network.”

Newman told Newsweek: “Prices will go up due to the 25 percent tariff, but it’s difficult to say when. BMW recently announced that it would hold its prices at the same levels through April, but what happens after that date is unclear. Automakers could choose to increase the price on impacted vehicles or spread the cost increase across their lineup.”

She added: “For shoppers, the cars on dealer lots weren’t impacted by this new tariff, so prices should remain the same as before the tariff announcement, but the market could dictate pricing moves too. The good news is that new cars are spending more time on lots—average is 79 days, which is in line with the 2019 average of 80 days. Some automakers appear to be bolstering inventory in advance of tariffs.”

UAW President Shawn Fain said on Thursday in a press release: “We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades. Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions.”

He added: “These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and it is now on the automakers, from the Big Three to Volkswagen and beyond, to bring back good union jobs to the U.S.”

Trump said on Wednesday of car prices: “You’re going to see prices going down, but it’s going to go down specifically because they’re going to buy what we’re doing, incentivizing companies and even countries with companies to come into America and build.”

Ivan Drury, director of insights at Edmunds.com, told CNN Business: “It is going to be expensive. It’s too soon to tell how much. But it’ll be a couple of thousands of dollars, if not more.”

What’s Next

The tariffs announced on Wednesday, which impact all cars assembled outside the U.S, will come into effect on April 3. Several allied countries, including Canada and France, have already promised to retaliate.