In the ever-changing world of global trade, tariffs have a powerful impact on everyday purchases — including something as major as buying a car. Recent tariffs introduced under President Trump’s administration have created significant shifts in both new and used car markets. If you’re thinking about buying or selling a vehicle, it’s important to understand what’s happening and how it might affect you.
First, What Are Tariffs?
Tariffs are taxes placed on goods imported from other countries. They are designed to make foreign products more expensive, encouraging consumers to buy domestic goods instead. However, because many industries — like automotive manufacturing — rely on global supply chains, tariffs can raise the cost of materials and parts, even for products assembled in the U.S. Those extra costs often end up being passed along to consumers in the form of higher prices.
How Tariffs Affect New Car Prices
When tariffs are placed on imported goods like steel, aluminum, and automotive parts, manufacturers often experience higher production costs. Those added costs typically trickle down to the consumer. Many automakers — even U.S.-based brands — rely heavily on global supply chains. Components like engines, electronics, and frames are often sourced from different countries.
Because of these increased material and part costs:
- New car prices have risen, even for vehicles manufactured in the U.S.
- Automakers sometimes reduce discounts or incentives to offset their higher expenses.
- The cost of certain models that rely more heavily on imported parts (luxury vehicles and trucks, for example) has seen sharper increases.
For example, Ford is an iconic American brand, but even Ford vehicles are affected by tariffs because their production depends on imported parts and metals. A truck assembled in Michigan might still include steel from Canada or electronics from Asia. As a result, Ford — along with brands like General Motors and Chrysler — has had to adjust pricing and manufacturing plans in response to the tariffs.
How Tariffs Affect Used Car Prices
Used car prices have also been impacted — and in some cases, even more dramatically. As new car prices rise, many shoppers shift their focus to the used market, driving up demand. High demand, combined with limited inventory, puts upward pressure on prices.
This isn’t the first time the used car market has seen a major spike.
A Quick Look Back: How COVID-19 Changed Car Prices
During the COVID-19 pandemic, car prices skyrocketed for several reasons:
- Production shutdowns at factories led to a shortage of new vehicles.
- A global semiconductor (computer chip) shortage stalled vehicle manufacturing.
- Many people avoided public transportation and rushed to buy personal vehicles.
Between 2020 and 2022, both new and used car prices reached historic highs. In fact, some used vehicles were selling for more than their original new sticker price!
While prices have moderated slightly since their peak, they never fully “crashed” back to pre-pandemic levels. Inventory levels improved a bit, but supply chain issues, inflation, and now, tariffs have kept prices stubbornly high.
In short: car prices never truly returned to “normal” after COVID — and now tariffs are adding even more pressure.
Tips for Buying (or Waiting!) in Today’s Market
If you’re shopping for a new or used car right now, here are a few smart strategies to help you save:
- Expand your search area. Broaden your search to include nearby cities or even states where prices might be more competitive.
- Be flexible on make and model. Some models are less affected by tariffs because they use fewer imported parts. Being open-minded can save you thousands.
- Consider slightly older vehicles. A 2- to 3-year-old car might offer the best balance between modern features and price savings.
- Act quickly if you find a fair deal. Prices are fluctuating, and good deals don’t last long in a tight market.
- Focus on total cost of ownership. Look at maintenance costs, fuel economy, and insurance — not just the sticker price.
- Be patient if you can. If you don’t urgently need a new vehicle, waiting for market conditions to stabilize could pay off.
The car market has been through a wild ride over the past few years — from pandemic shortages to new tariffs. Staying informed, flexible, and patient will be key to navigating it smartly!
