Auto Market Faces Sharp Price Hikes Amid Trump’s 25% Tariffs, Experts Warn

Detroit, MI – The U.S. auto market is entering what experts are calling a “roller coaster ride” as new tariffs introduced by the Trump administration are poised to send both new and used vehicle prices soaring, according to a new report from Cox Automotive.

President Donald Trump’s 25% tariff on imported vehicles, which went into effect last week, and an upcoming 25% duty on imported auto parts, expected by May 3, are projected to add thousands of dollars to the sticker prices of vehicles — impacting both foreign and domestic manufacturers.

“We expect declining discounts followed by rapid price increases as these tariffs work their way through the system and tighten vehicle supply,” said Jonathan Smoke, Chief Economist at Cox Automotive, during a virtual briefing on Monday.

According to Cox's estimates, imported vehicles could cost up to $6,000 more, while vehicles assembled in the U.S. could see prices rise by approximately $3,600 due to higher costs of imported parts. These increases are in addition to the $300–$500 jump in costs stemming from earlier tariffs on steel and aluminum.

Impact Spills Over to Used Vehicle Market

Although used vehicles are not directly subject to tariffs, they are far from immune to the ripple effects. With new car prices climbing, more consumers are expected to turn to the used car market, increasing demand and pushing prices upward.

Cox Automotive has revised its projection for used vehicle price increases on the Manheim Used Vehicle Value Index, now expecting a 2.1% to 2.8% rise by year-end — nearly double its previous estimate of 1.4%.

“Expect to see some volatility in pricing throughout the year,” said Jeremy Robb, Cox’s Senior Director of Economic and Industry Insights. “The week following the tariff announcement could very well mark the peak of auto sales this year.”

The average listing price for a used vehicle stood at $25,000 as of mid-March, with analysts anticipating a steeper rise in coming months as consumers scramble to purchase vehicles before additional price hikes set in.

Manufacturers Adjust, But Consumers to Bear the Brunt

Automakers have begun responding to the tariffs with varying strategies. Ford and Stellantis are offering short-term employee pricing incentives, while Jaguar Land Rover has already halted U.S. shipments. Hyundai has pledged not to raise prices for at least two months in an effort to retain customer trust.

However, not all manufacturers are in a position to shield customers from cost increases. Analysts expect that a significant portion of these costs will be passed on to consumers, especially as automakers face growing pressure on margins.

“There’s only so much the supply chain can absorb,” said an analyst with Morgan Sachs Capital. “Ultimately, the consumer will feel it — and soon.”

Market Turbulence Echoes Pandemic-Era Disruptions

Dealers are already feeling the pressure. Ryan Rohrman, CEO of Indiana-based Rohrman Automotive Group, said his company is facing supply issues similar to those experienced during the pandemic.

“Our wholesale inventory is rising, but we’re not retailing enough used vehicles,” Rohrman said. “It’s pushing us back to auctions, and that’s driving up car values — just like it did during Covid. It’s a scary dynamic.”

While industry insiders believe the production cuts and inventory disruptions won’t be as severe as those during the 2020 supply chain crisis, they caution that demand-side forces are shifting. Fewer consumers may be willing to absorb higher prices, particularly with rising interest rates and broader economic uncertainty.

Looking Ahead: Reduced Demand, Fewer Models?

Cox’s Smoke warned that if these tariffs remain in place long term, the U.S. market may see reduced model availability, delayed production plans, and shifts in consumer buying habits. Certain trims or vehicle models may even be eliminated altogether to reduce exposure to import costs.

“It’s not just a pricing issue — it’s a structural one,” Smoke said. “The tariffs are likely to reshape what’s offered to consumers in the first place.”

In the meantime, experts advise prospective car buyers to act sooner rather than later — as prices are expected to climb throughout the year, and vehicle affordability could become a growing challenge for millions of Americans.