Tariffs Create Tough Choices for Car Shoppers as Prices Rise
April 10, 2025
American car buyers are facing increasingly difficult decisions as recently implemented tariffs on imported vehicles and parts have begun to significantly impact prices across both domestic and foreign automobile markets.
The tariffs, which went into effect earlier this year as part of the Trump administration’s broader trade policy, have created a complex purchasing landscape where traditional assumptions about vehicle pricing and value are being upended.
“I’ve been planning to replace my Honda for months, but now I’m completely stuck,” said Michael Rodriguez, a software engineer from Phoenix who was shopping at a local dealership. “The Japanese models I was looking at are suddenly $4,000 more expensive, but American-made cars have gone up too because they use imported parts. It feels like there’s no escape from these price increases.”
Rodriguez’s experience reflects a growing reality for consumers nationwide. While the tariffs were primarily targeted at fully imported vehicles, the globalized nature of auto manufacturing means even “American-made” vehicles contain significant percentages of foreign-sourced components, leading to price increases across virtually all makes and models.
Industry data shows the average new vehicle price has increased 8.7% since January, with imported luxury vehicles seeing increases of up to 15% in some cases. Used car prices have also climbed as demand shifts toward the pre-owned market.
“We’re seeing customers who planned to buy new now shopping certified pre-owned, and customers who wanted certified pre-owned now looking at older used models,” explained Jennifer Parsons, general manager of Capital City Auto Group in Columbus, Ohio. “Everyone is essentially moving down one tier from what they originally budgeted for.”
The situation has created particular challenges for dealerships that carry both domestic and imported brands. Sales staff report spending significantly more time explaining price changes to confused customers.
“People come in with research they did just a few months ago, and those numbers are completely obsolete now,” said Marcus Washington, a sales consultant at a multi-brand dealership in Atlanta. “We’re having to re-educate customers about the market reality, and sometimes they think we’re just trying to charge more.”
The tariffs have also disrupted the traditional price hierarchy between domestic and imported vehicles. Certain American-made models that previously commanded price premiums because of their domestic manufacturing are now sometimes less affected by tariffs than vehicles from American brands produced in Mexico or Canada.
“I always bought American, thinking it would be better for American workers,” said Ellen Thompson, a retired teacher from Michigan who was shopping for a new SUV. “Now I’m finding out that some ‘American’ brands actually import their vehicles, while some ‘foreign’ brands build them here with American workers. It’s confusing to know what choice actually supports American jobs.”
Automakers have responded to the situation with varying strategies. Some are absorbing a portion of the tariff costs to maintain market share, while others are fully passing them on to consumers. Many are accelerating plans to increase domestic production capacity, though industry experts caution that significant manufacturing shifts could take years to implement.
“The automotive supply chain is incredibly complex and can’t be reconfigured overnight,” explained Dr. Robert Chen, professor of global supply chain management at Michigan State University. “Even if a manufacturer wants to source more components domestically, they may find that no American supplier has the capacity or technical capability to produce what they need.”
Financial advisors are increasingly counseling clients to postpone vehicle purchases if possible or consider alternatives to buying new.
“We’re telling clients who don’t absolutely need a new vehicle right now to consider repairs on their current car instead,” said financial planner Sophia Williams. “If they must buy, we’re suggesting they look at leasing options or certified pre-owned vehicles that haven’t been as severely impacted by recent tariff increases.”
Consumer advocacy groups have expressed concern about the broader economic impact of higher vehicle prices. “Transportation is already the second-highest household expense for most Americans after housing,” noted Marcus Johnson, policy director at the Consumer Choice Alliance. “These tariff-driven price increases are forcing difficult budgetary decisions for middle-class families.”
For buyers who can’t postpone their purchase, experts recommend expanding their search beyond preferred brands and considering vehicles with fewer optional features to stay within budget constraints.
“The traditional advice about how to get a good deal on a car has been upended,” said automotive analyst Lisa Martinez. “In this market, simply finding a vehicle that meets your needs without breaking your budget is the new definition of success.”