Cars have always been expensive, and while everyone knows that their prices have been gradually going up over the past few years, the newly imposed tariffs put in place by Donald Trump are likely going to hike the prices up even more.
It used to cost just under 50K
According to Statista, the auto industry in the US sold just under 16 million ‘light vehicles’ in 2024. Those include cars, vans, and small trucks, 3 million of which were passenger cars.
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In the same year, an average new car would cost you around $48,000, but it’s about to get more expensive than this.
Trump announced high tariffs this week
On April 2, US President Donald Trump announced he would be imposing incredibly high tariffs on most nations, on a day that he called ‘Liberation Day’.
Trump said in his speech, “This is Liberation Day. We’ve been waiting for a long time, April 2, 2025, will forever be remembered as the day American industry was reborn, the day America’s destiny was reclaimed, and the day that we began to ‘Make America Wealthy Again.’”
How the tariffs are affecting cars
While Trump is imposing a 10 percent tariff on all goods imported into the US from other countries, he is also imposing a 25 percent import tax on cars and car parts specifically.
Tariffs are fees paid by companies to the local government when importing goods from foreign countries. The increase in tariffs would hence cause car companies to raise their prices in order to keep up with the fees of manufacturing them.
AEG predicted the hike in prices after the tariffs
Anderson Economic Group (AEG), an economic consultancy, predicted that the newly imposed tariffs on cars could have a consumer impact of as high as $30 billion for the first full year.
They said there could be an additional cost of $2,500 to $4,500 on the lowest-tariffed cars. AEG said, “For certain small crossovers, sedans, and one mid-sized SUV assembled in the United States, we estimate a tariff cost of $2,500 to $4,500.”
They explained what cars are considered low-tariffed
“The Honda Civic and Honda Odyssey had high US content and one of the lowest tariff costs in this group. The Chevy Malibu, VW Jetta, and Ford Explorer were also among the vehicles in this group that were less impacted by tariffs,” AEG added.
Mid-sized cars could go up even higher
The economic consultancy also said that prices of ‘mid-sized vehicles’ could go up $5,000 to $8,500. “Some Jeep, Ram, and Toyota truck models are in this category,” it said.
Full-size SUVs will suffer the highest price hikes
AEG also added that full-size SUVs will be the most impacted by the tariffs with the large vehicles seeing a hike between $10,000 and $12,000 in prices.
“The large SUV category includes models assembled in the US with parts from Canada, Mexico, and Europe, and having relatively high [manufacturer’s suggested retail prices],” AEG explained.
Luxury vehicles would, of course, cost more
“These vehicles are expected to see a tariff impact of $10,000 to $12,000, with some battery-electric vehicles incurring a potential tariff exceeding $15,000,” AEG added.
Luxury vehicles could meanwhile face tariffs exceeding $20,000, these include luxury sedans, SUVs and sports vehicles.