Will Trump’s 25% auto tariffs drive US car buyers off the road?

Nearly half of the cars sold in the US are imported, and Trump’s proposed 25% tariff could add at least $6,000 to the average car’s price, according to industry experts. With reduced competition from imports, domestic automakers may also raise their prices, potentially angering inflation-weary consumers and voters—despite Trump’s campaign pledge to lower costs.

Working-class car buyers will be most affected, as nearly all low-cost new vehicles sold in the US are produced overseas. Higher prices could lead to a sharp decline in auto sales, potentially slowing production as well. Lower-income buyers may face additional challenges as rising demand and limited supply drive up used car prices.

New cars priced under $30,000 are already rare, with the average new vehicle now nearing $50,000. Analysts say automakers can only turn a profit on economy models by manufacturing them in countries with lower production costs.

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Only 16 models are priced below $30,000, with just one—the Toyota Corolla—assembled in the US while the rest are built in Mexico, South Korea, or Japan, a Reuters analysis of data from two auto research firms found.

The 25% tariff on these low-cost imports could push them beyond the reach of budget-conscious buyers or lead automakers to discontinue them altogether, analysts warn.

“New vehicles across the board are going to be more expensive,” said Sam Fiorani, vice president of research firm AutoForecast Solutions. ”That’s going to push more buyers into the used market, which will also raise the price of used vehicles.”

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Burnis Carrington, of Monroe, Louisiana, is shopping for a used car instead of a new one, as he worries about tariff-driven price increases.

“Most families in need of a family car are paying prices that approach nearly half of what their home may be worth,” he said. “The underlying problem is still that nothing is being done to make the vehicles made domestically more affordable.”

Trump’s political base of rural supporters could be among those bearing the brunt of the import taxes. About half of voters reporting household incomes of less than $50,000 annually backed Trump’s 2024 election, along with 56% of voters without college degrees, according to an Edison Research exit poll.

Trump told NBC news on Saturday that he ”couldn’t care less” if automakers hike prices, ”because if the prices on foreign cars go up, they’re going to buy American cars.”

Many of those foreign cars are made by American automakers, including three under-$30,000 vehicles from GM: The Buick Envista and Chevrolet Trax and Trailblazer. All three are made in South Korea. GM also makes hundreds of thousands of its hot-selling full-sized trucks in Mexico.

Trump argues tariffs will spark a boom in the U.S. auto industry. Some experts contend that high import taxes will have the opposite effect.

“As vehicle affordability decreases due to higher prices, households may begin prioritizing other areas of their budget, cutting back on discretionary spending or delaying large purchases,” conservative supply-side economist Arthur Laffer wrote in a March report.

Automakers abandon budget-friendly vehicles

Detroit automakers General Motors, Ford, and Stellantis, the maker of Jeeps and Ram trucks, have discontinued most entry-level models in recent years to focus on highly profitable trucks and SUVs. That has left the economy-vehicle market almost entirely to Asian automakers.

“I just don’t see them ever really going back there,” said Karl Brauer, executive analyst at iSeeCars.com.

Ford makes its least expensive vehicles, the compact Maverick truck and mid-sized Bronco Sport, in Mexico. They both sell for more than $30,000 on average, according to data from Cox Automotive, based on average sticker prices of models sold in January and February. The same is true for Jeep’s most affordable model, the Compass, which it builds in Mexico.

The under-$30,000 models built by Nissan, Mazda, Hyundai, Kia, Toyota, Subaru, and Volkswagen are almost all built in Mexico or South Korea, according to AutoForecast Solutions.

Honda makes its top-selling Civic in Canada and the United States. Its compact HR-V crossover is made in Mexico. The average sticker prices for both models were slightly above $30,000, according to Cox Automotive.

The margins on these vehicles are low, and their buyers are price-sensitive. That means high tariffs might make them impossible to sell at all, Brauer said.

A 25% tariff, he said, will “completely blow apart the business case” for entry-level vehicles.

Cox Automotive estimates that 25% tariffs will add $3,000 to the cost of a U.S.-made vehicle and $6,000 to vehicles made in Canada or Mexico.

Ford said it is still evaluating the potential impact of tariffs on lower-cost vehicle prices. The other automakers cited in this story did not comment.

Used car prices may surge again due to tariffs

Some industry experts compared the potential impact of high tariffs to the supply-chain shortages that drove up new and used vehicle prices during the pandemic.

Used car prices have eased since then. The average used-vehicle listing price was $25,006, down 1% from a year ago.

But the supply of more affordable used cars remains relatively tight, according to Cox. Dealers have about a 30-day supply of used cars below $15,000, or about 12 days less than the overall used-car supply.

”Used vehicles in the $15,000 to $25,000 range will be the most in demand,” because automakers will abandon that production, Fiorani said.

Phoenix resident Eric Fenstermacher, 44, started car-shopping more urgently as Trump started threatening tariffs. The IT worker bought a 2022 Honda Accord in mid-March after struggling to find a new vehicle he liked for less than $30,000.

”I feel extremely relieved,” Fenstermacher said. ”I’m glad I got this done when I did. Otherwise, this price would have gone up.”