A Shopper's Guide to Tariffs: What to Know When Buying a Car

If it seems like a chaotic time to buy a car—new or used—that’s because it is. But don’t fret: We here at Car and Driver can help you navigate the uncertainty surrounding the sweeping tariffs currently facing everyone shopping for a car, whether it’s their first set of wheels or upgrading from an existing model. We’ll help you understand what tariffs are, what to expect during the buying process, and how to find deals, as well as how long this situation is likely to go on.For more information on the evolving auto tariff situation, click here to read Car and Driver’s comprehensive coverage. We will update this story regularly to respond to ongoing developments.What Is a Tariff? Before we explain the impact that tariffs will have on the car-buying process, we should clearly define what a tariff is and what it is not. A tariff is a tax on goods (in the current case, 25 percent on cars) that is charged to an importer when bringing that product into the country. Tariffs are not necessarily a tax levied on foreign manufacturers. Take the Honda Odyssey as an example. Honda is a Japanese automaker, but it builds the Odyssey in the United States and therefore won’t be required to pay an import tariff on that model. The Ford Maverick, on the other hand, is built in Mexico, meaning new Maverick pickups brought into the United States in the future will be subject to the tariff. So tariffs are not a way to tax foreign producers for their products, but instead are designed to raise prices on foreign goods to the point of incentivizing manufacturers to build products in the U.S. and encouraging American consumers to shop for domestic alternatives. While all new cars coming into the country will be subject to the new tariffs, not all costs will be passed down evenly to customers. We’ll get more into that breakdown below.How Are Tariffs Affecting New Cars?It’s complicated, but the important part for you is that most new cars are going to become more expensive in the coming weeks and months. Once the current stock of pre-tariff cars is sold from dealer lots, they’re most likely going to be replaced by models hit with the 25 percent levy at the border. Exactly how much prices will rise on those vehicles is harder to predict.Like many other industries, automotive production is an elaborate global affair. Many parts cross multiple borders as more and more complex components are built on the way to a car’s final production. We also need to consider how much cost each automaker is willing or able to absorb by lowering profit margins—it’s likely that there will be some sort of dance between automakers as they each change prices and respond to one another. While President Trump has announced what he calls “reciprocal” tariffs on nearly every country, some vehicles from Canada and Mexico have been spared. Vehicles imported to the United States from Canada or Mexico that are compliant with the rules of the United States-Mexico-Canada Agreement will only be taxed on the non-U.S. content they contain. That means a Canada-made USMCA-compliant car valued at $30,000 with $15,000 worth of American parts will only be subject to the 25 percent tariff on the remaining $15,000. Because of the above complexity, there’s no one number for exactly how much more expensive you can expect new cars to be. The low end of expected increases looks to be a few thousand dollars, perhaps $3000 to $5000, with some analysts forecasting price increases as high as $10,000 to $15,000 on certain imported cars. Why Were Tariffs on Cars Put in Place? The president has stated multiple justifications for the new tariffs. One is that he sees them as a tool to level trade deficits with other countries. He also hopes the new levy will spur automakers into building new factories in the U.S. and revitalize American manufacturing. Finally, the president has said that tariffs on China, Mexico, and Canada are intended in part to pressure those governments to curb the flow of fentanyl into the U.S.How Long Will the Tariffs Last? At this stage, there’s no real way to anticipate how long these tariffs will last. White House officials have made statements saying that the “reciprocal” tariffs are not negotiating tactics and are here to stay, though the president has followed up those statements by commenting that the tariffs can be used as a great negotiating tactic. With that in mind, the new tariffs could be in place for days or weeks, as some officials have insinuated, or they could stay in place until a new administration takes over the White House.What to Expect When You Buy a New Car? The tariffs are expected to make buying a new car more expensive. However, how much their prices will go up and when will depend on the brand, the model, and the import status. While Ferrari has announced that it is raising some prices in response to the tariffs, many other mainstream automakers are taking a wait-and-see approach, although several have publicly said they won’t raise prices for a month or two (more on that below).How Do I Tell If a New Car Is Affected by Tariffs? Since every new car that’s imported into the U.S. after April 2 is subject to a 25 percent tariff, you can identify their import status on the window sticker (a.k.a. the Monroney), which also details the percentage of parts that are imported or made in America. While imported car parts aren’t currently being tariffed, that’s expected to change on May 5, which will likely lead to higher prices. Some automakers are reportedly identifying cars with or without added import fees on their Monroney, but right now, there’s not a universal standard, and the way tariff costs are passed on to customers will likely vary by the dealer.Bloomberg|Getty ImagesFlags on display at a Ford dealership in Miami, April 5, 2025.What To Expect When You Go to a DealershipDealerships across the country are still trying to figure out how to respond to the new landscape. When Car and Driver spoke to Will Hardeman, managing partner of Continental Automotive Group, he said, “The final assembly is one point on the supply chain and the dealer is another point, and it has yet to be seen who will bear these ultimate costs . . . I think it will be shared across the board.” Are There Tariff Deals, and How Long Will They Last?The tariffs are expected to raise prices across the board, but several automakers are offering special deals for car shoppers in a bid to prevent sales from sliding dramatically in the first couple of months after the implementation of the tariffs. Some companies have decided to eat the cost of the tariffs for this initial period, while others are offering discounts as they figure out how to navigate this new landscape.”Employee Pricing” as a Sales Tool Two American behemoths have decided to offer employee pricing to all customers. Ford’s plan, which it calls “From America, for America,” is accompanied by a new commercial. The plan will give customers an employee discount for a number of 2024 and 2025 model Ford and Lincoln vehicles. The deals last through June 2 but don’t apply to certain 2025 U.S.-built vehicles, including the Ford Expedition, Lincoln Navigator, Ford Super Duty trucks, and the potent off-road Raptor models. Other models that are not covered include “specialty” Mustangs such as the Dark Horse, the Bronco Stroppe Edition, and some commercial products like E-series chassis cabs. However, it’s crucial to note that Ford says dealer participation in this program is “discretionary,” so it’s not a complete guarantee.Just a day after Ford, Stellantis announced it will offer employee pricing for all customers for its existing inventory of 2024 models. The deal only lasts until April 30 but will apply to popular models such as the Chrysler Pacifica, Dodge Charger, Jeep Compass, and Ram HD trucks.Holding the Line on Price—for NowOther automakers are just planning to absorb the costs of the tariffs, at least initially. BMW, which builds models such as the long-running 3-series sedan and the sporty M2 coupe in Mexico, says it will cover the tariffs for its Mexico-built vehicles until May 1. BMW’s luxury rival, Mercedes-Benz, also plans to cover the costs of the tariffs for the time being, but the company hasn’t said how long it will do so.Hyundai also said it won’t raise prices due to the tariffs for at least two months, but the Korean automaker has decided to stop offering free complimentary maintenance starting with the 2026 model year. The pricing freeze, which also applies to the company’s Genesis luxury brand, will last until June 2.Nissan responded to the tariffs by slashing the prices of two of its top sellers, although both are already built in the U.S. The Rogue SUV received up to $1930 in price cuts, while the Pathfinder’s price has been reduced by up to $1170. Nissan hasn’t revealed any plans for its Mexico-made models, the affordable Kicks, Sentra, and Versa.Jay L Clendenin|Getty ImagesHow Will Tariffs Affect Shopping for a Used Car? The effect that climbing new-car prices have on used values is likely to come down to simple supply and demand: If there are fewer new cars at affordable price points, buyers will gravitate toward the “lightly used” market, creating more demand for that somewhat fixed supply.We’ve seen a similar squeeze on the new-car market before. The COVID-19 pandemic’s combination of plant shutdowns, supply constraints, and chip shortages reduced output, pushing more consumers toward pre-owned vehicles by necessity. On top of that, there are still lingering effects of pandemic-era supply constraints; with fewer new vehicles entering the market about a lease cycle ago, there are now fewer off-lease cars to feed dealer lots.Jeremy Robb, senior director of economic and industry insights at Cox Automotive, sees higher used-car prices lasting for several years. The situation may not get as dire this time around, though. Robb doesn’t expect used-vehicle prices to climb back to the levels we saw during the pandemic buying frenzy.The bottom line for the used market is that, at least for now, prices will go up as selection goes down. Expect pre-owned examples of models that are no longer imported or that have big price hikes to be hardest hit.More Tariff TalkJack Fitzgerald’s love for cars stems from his as yet unshakable addiction to Formula 1.
After a brief stint as a detailer for a local dealership group in college, he knew he needed a more permanent way to drive all the new cars he couldn’t afford and decided to pursue a career in auto writing. By hounding his college professors at the University of Wisconsin-Milwaukee, he was able to travel Wisconsin seeking out stories in the auto world before landing his dream job at Car and Driver. His new goal is to delay the inevitable demise of his 2010 Volkswagen Golf.Caleb Miller began blogging about cars at 13 years old, and he realized his dream of writing for a car magazine after graduating from Carnegie Mellon University and joining the Car and Driver team. He loves quirky and obscure autos, aiming to one day own something bizarre like a Nissan S-Cargo, and is an avid motorsports fan.Eric Stafford’s automobile addiction began before he could walk, and it has fueled his passion to write news, reviews, and more for Car and Driver since 2016. His aspiration growing up was to become a millionaire with a Jay Leno–like car collection. Apparently, getting rich is harder than social-media influencers make it seem, so he avoided financial success entirely to become an automotive journalist and drive new cars for a living. After earning a journalism degree at Central Michigan University and working at a daily newspaper, the years of basically burning money on failed project cars and lemon-flavored jalopies finally paid off when Car and Driver hired him. His garage currently includes a 2010 Acura RDX, a manual ’97 Chevy Camaro Z/28, and a ’90 Honda CRX Si.
Source: caranddriver.com