Car prices expected to rise after Trump announces tariffs
The Brief
After President Donald Trump's 25% tariff announcement on March 26 for imported cars and parts, car dealerships expect higher prices and lower sales.
The tariff is expected to go into effect on April 3.
PHOENIX - There's a big road bump for car buyers.
What we know
President Donald Trump announced 25% tariffs on all imported cars and trucks, along with auto parts.
It's part of his plan to ramp up auto production in America, targeting countries like Mexico, Canada, Germany, and Japan.
The tariffs are expected to go into effect on April 3.
It'll affect cars and trucks, along with auto parts, which include any American vehicles, assembled, or partly assembled, outside the country.
The tariffs can raise repair costs, as well as delays for those repairs. More than half of all auto parts come from somewhere other than the U.S.
What they're saying
"Car parts are not going to be available. Why? Because most dealerships are going to say, 'Alright, I usually carry $1 million in inventory, but I don't know what's going to sell. I don't know if the consumer is going to want to buy it, so I'm going to go down to $250,000 only and hold off, and when they come in, and I don't have it, sorry,'" Shahe Koulloukian of the MAZVO Auto Center said.
Tim Hovik is the owner of San Tan Ford and has a direct line to Detroit, known as "Motor City" because of all the car manufacturing.
"None of us are 100% sure what it's going to mean, but it can't mean that they're going to be less expensive," he said.
Like everyone, he's scratching his head over what this might mean, but warns potential buyers to buckle up.
"Clearly there's going to be additional costs to manufacture vehicles and, based on that cost, I don't think it's going to be a good scenario for consumers and I don't think it's a good scenario for the auto industry," Hovik said.
Around all cars and half of all auto parts are imported into America. Any tariffs on aluminum and steel won't immediately help the auto industry, either.
Not to mention the overall economy.
"When the auto industry is healthy, our economy is generally very healthy, so obviously I've got skin in the game. I'm concerned about the big picture as well," Hovik said.
On the other hand, auto mechanics should be in demand. It's usually cheaper to fix the old car than buy a new one you can no longer afford.
The other side
The tariffs, which the White House expects to raise $100 billion in revenue annually, could be complicated as even U.S. automakers source their components from around the world.
The tax hike starting in April means automakers could face higher costs and lower sales, though Trump argues that the tariffs will lead to more factories opening in the United States and the end of what he judges to be a "ridiculous" supply chain in which auto parts and finished vehicles are manufactured across the United States, Canada and Mexico.
"This will continue to spur growth," Trump said on March 26. "We'll effectively be charging a 25% tariff."
To underscore his seriousness, Trump said, "This is permanent."
What you can do
You could avoid the tariffs by buying used cars, but that would increase demand, and likely mean higher prices for used cars, too.
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