Will Used Cars Be Cheaper Than New Under Trump’s Auto Tariffs? Experts Explain
Written by
Tobi Opeyemi Amure
Edited by
Amber Barkley
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Auto experts predict both new and used car prices will increase under President Donald Trump’s 25% auto tariffs.
According to Lauren Fix, automotive expert at Car Coach Reports, “Tariffs will push up new car prices, but used vehicles won’t automatically become a bargain.”
Fix explained that higher new car costs can drive more buyers to the used market, which may actually push those prices up, as well.
The tariffs on imported vehicles began on April 4, with an additional 25% tariff on auto parts added in early May. Analysts believe these trade measures will drive thousands of dollars in price increases across both markets, though used vehicles may offer better relative value.
How Tariffs Are Affecting New Car Prices
New vehicle prices were already high before tariffs, with the average transaction price hovering around $47,962, according to Kelley Blue Book.
Cox Automotive predicted that tariffs will add approximately $6,000 to imported cars and $3,600 to vehicles made within the U.S. due to forthcoming parts tariffs, as reported by CNBC. These figures are supplementary to the expected $300 to $500 increases stemming from previously announced tariffs on steel and aluminum.
Production costs could rise significantly, and manufacturers are likely passing much of these expenses to consumers.
“Manufacturers will likely absorb some expenses to prevent sharp price hikes,” said Chris Pyle, auto expert with JustAnswer. “They’ll spread increases across multiple models rather than drastically raising one model’s price.”
Budget-friendly vehicles are particularly vulnerable, with nearly 80% of vehicles priced under $30,000 subject to the new import tariffs, according to Cox Automotive. Popular models affected include the Honda Civic, Toyota Corolla, Chevy Trax and Nissan Sentra, as well as many compact SUVs like the Toyota RAV4 and Honda CR-V.
Used Car Market Already Feeling Effects
The used car market is experiencing price increases, even though tariffs don’t directly apply to pre-owned vehicles. Prices began rising in early March as consumers anticipated the tariffs and rushed to make purchases.
According to Sean Mactavish, CEO of used-car marketplace Autozen, the prices of used cars will continue to rise due to high demand. He told CBC News, “New car prices go up, people look into used cars, and then that increase in demand drives the prices up for used vehicles.”
Cox Automotive has dramatically revised its forecast for wholesale used car prices from a relatively stable 1.4% to a substantial 21%-28% increase by year’s end. This situation mirrors the price surges witnessed during the COVID-19 pandemic, when supply chain disruptions limited new car availability.
Will Used Cars Be More Affordable Than New?
Used cars will likely maintain their price advantage over new vehicles but will not become cheaper in absolute terms. As of mid-March, the average listing price for a used vehicle was around $25,000, just before a significant sales surge driven by tariff concerns.
Reuters revealed that vehicles in the $15,000-$25,000 price bracket will likely see the highest demand increases, according to industry analysts. This price pressure comes at an unfortunate time, as springtime typically represents a busy buying season, as tax refunds entice many consumers to purchase vehicles.
The tariff implementation coincides with what industry experts call the “spring bounce” in auto sales, further intensifying demand pressures.
Insurance and Financing Implications
The rising cost of vehicles and repairs will likely affect other aspects of car ownership, including insurance premiums. Fix said higher vehicle costs — whether new or used — will further strain household budgets already coping with inflationary pressures.
Monthly car payments were already pushing affordability limits before the tariffs took effect. Financial experts traditionally recommend that car payments should not exceed 10% of take-home income, but the average payment for used vehicles is already approaching this threshold.
The Wall Street Journal predicted that many Americans could find themselves priced out of the new car market entirely, as tariffs potentially push new vehicle payments to 15% of monthly budgets.
Long-Term Effects on the Auto Market
Industry analysts believe tariffs could create long-term disruptions similar to those experienced during the COVID-19 pandemic.
Fix predicted automakers may adopt the strategy of reintroducing stripped-down, entry-level models with minimal options to attract price-sensitive buyers. She believes this strategy could reshape consumer preferences toward affordability over features.
Fix also highlighted potential benefits of these tariffs in boosting U.S.-based manufacturing and job creation over time. However, she acknowledged this transition would require significant investment and patience as automakers adjusted their production strategies.
Meanwhile, automakers like Hyundai and BMW are implementing temporary pricing holds to alleviate consumer concerns about immediate cost increases. Stellantis has already paused operations at its Windsor facility in response to tariff-related pressures.
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Sources
- Lauren Fix, Car Coach Reports
- Kelley Blue Book, “Average New Car Price Held Steady in Pre-Tariff Sales Surge.”
- CNBC, “Trump’s ongoing 25% auto tariffs expected to cut sales by millions, cost $100 billion.”
- Chris Pyle, JustAnswer
- Cox Automotive, “New Auto Tariffs Are Now in Place, Driving the Industry into Uncharted Territory.”
- CBC, “New and used car prices set to rise due to Trump tariffs: experts.”
- Cox Automotive, “Wholesale Used-Vehicle Prices Decreased in February.”
- Reuters, “Why Trump’s auto tariffs will hurt his working-class supporters.”
- The Wall Street Journal, “Cars Were Already Unaffordable Before Tariffs.”
