The new US tariffs could have a big impact on car prices

Despite a 30 day pause in 25% tariffs on Mexico and Canada, one automotive expert says the eventual tariffs would impact car prices

Most domestic brands will feel the impact

Vehicles are just one of the products that will get more expensive under President Trump's tariffs, notwithstanding the 30-day pause on tariffs against Mexico and Canada. Trump agreed to the pause Monday after Mexico agreed to send 10,000 troops to the U.S. border and Canada made similar concessions.

U.S. automakers have plants in both Mexico and Canada, so technically these American cars and trucks are imports and would be subject to the new tariffs. Karl Brauer, executive analyst at iSeeCars, said the financial impact on U.S. car buyers will largely be determined by how long the tariffs remain in place.

“I suspect Trump doesn’t want to impose 25% tariffs indefinitely, though he likely will impose some level of new tariffs permanently,” Brauer told ConsumerAffairs. “I see this as a negotiation tactic meant to alter various policies with foreign countries and expect the tariffs to moderate somewhat as negotiations continue.”

Short-term impact

In the short term, Brauer said he expects automakers to quickly evaluate their options to control costs. He said this could range from shifting production locations to altering product plans as companies try to determine the least disruptive, most cost-effective changes to vehicle operations. 

“I would expect U.S. plants and suppliers to see more demand in both the near term and long term,” he said.

American car shoppers may be hard-pressed to find a brand that isn’t impacted by the tariffs. Brauer said  Brands that depend heavily on Canada and Mexico for production, including Ford, GM, Honda, Nissan, Stellantis, Toyota, and Volkswagen, may face the most pressure to raise prices.