2 days ago
Planning to buy a new car? It may make sense to act now—before tariffs push prices higher
If you're shopping for a new car, you might want to act now before tariffs push prices higher.
That's because sticker prices are still hovering near pre-tariff levels, in part because many models on dealer lots were built before the new rules took effect.
"There's a lot of uncertainty, but retail prices are holding pretty steady," says Mark Schirmer, a spokesperson for Cox Automotive. In May, the average transaction price for a new vehicle was $48,799, virtually unchanged from April, according to Cox's data.
"We're not quite seeing the full impact of the tariffs yet," says Joseph Yoon, consumer insights analyst at Edmunds. The automotive research firm's data shows monthly payments on new loans for both new and used vehicles rose slightly in May — an increase in line with typical month-to-month changes.
As of June, the Trump administration has imposed a 25% tariff on imported vehicles and many foreign-made auto parts. The policy includes temporary exemptions for some components from USMCA countries, announced in April, but most imports still face added costs.
These new auto tariffs come on top of metal import duties — including steel and aluminum tariffs as high as 50% — that are already driving up costs across the auto supply chain, even for vehicles assembled in the U.S.
"There are significant tariffs on the auto industry right now," Schirmer says. "The reality is, tariffs are inflationary," and with those added costs, car prices will increase "unless something changes drastically in the near term."
Instead of raising sticker prices, automakers have largely absorbed costs through scaled back rebates and financing deals since April, according to The Detroit News.
"We believe dealers and automakers are getting squeezed a little bit on pricing," with dealers reporting lower profits in the second quarter compared with earlier this year, says Schirmer. So far, they've mostly held the line on retail pricing, but it's not clear how long that can last, he says.
And while there was a tariff-driven buying surge in March and April, sales declined in May, according to Cox Automotive data, suggesting that many consumers may be holding back on big purchases amid economic uncertainty. That slowdown has helped keep prices flat, says Schirmer.
Another reason prices haven't soared: Most vehicles currently on dealer lots were built before the tariffs took effect. But that inventory is running out, says Schirmer. As dealer inventory turns over, newer models are more likely to reflect higher costs.
Ford and Subaru have already raised prices on some vehicles by as much as $2,000, and more increases are likely to follow. Depending on the model, tariffs could add anywhere from $2,000 to more than $15,000 to the cost of a new vehicle, according to estimates from the Anderson Economic Group.
Uncertainty is a recurring theme when it comes to tariffs — and the auto market is no exception. It's still largely unclear how prices might change or when that might be, says Yoon.
But with auto loan interest rates expected to stay relatively stable through the rest of the year, buying now can make sense if the financing works for your budget, he says. Used cars or leases could also be smart alternatives to buying new models, especially if they help lower monthly costs.
Either way, "if the car you want to buy is available, you should just go buy it," Yoon says.
