what do tariffs mean for buying a new car?
the burgeoning north american trade war will drive up t...
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vehicles are shown at a windsor car dealership on tuesday, march 4, 2025. u.s. president donald trump launched a full-scale economic war with the country’s once closest trading allies on tuesday, imposing punishing 25 per cent tariffs on virtually all canadian and mexican products.
dan janisse
/
windsor star
the burgeoning north american trade war will drive up the prices of new cars by thousands of dollars, sparking a major consumer shift toward the used vehicle market, according to analysts.
“competition in this market is fierce,” sam fiorani, vice-president of autoforecast solutions in philadelphia, told the star on tuesday. “but if imports outside of north america are tariffed as well, we’re likely to see a five to 10 per cent increase in prices for the longer term.”
anderson economic group, a michigan-based consultant firm, said the newly announced tariffs against mexico and canada could drive the price of some models by u.s. $12,000.
u.s. president donald trump launched a full-scale economic war with the country’s once closest trading allies on tuesday, imposing punishing 25 per cent tariffs on virtually all canadian and mexican products.
prime minister justin trudeau responded immediately, stating canada will retaliate with 25 per cent tariffs on $155 billion worth of u.s. goods.
analysts and industry experts have been warning for weeks that tariffs will inflict significant and permanent damage to the north american auto sector, while driving up prices.
fiorani said it will likely take a few weeks for car buyers to feel the effects.
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“in the short term, manufacturers are going to be optimistic and hope for a near term answer to the problem and removal of the tariffs altogether,” he said. “it’s unlikely that significant price rises will happen immediately.”
but once current car lot inventories decline, prices will increase.
“give it a couple weeks and if supplies of vehicles that are shipped across borders become in short supply, then those prices are definitely going to go up,” said fiorani.
larger price increases of 10 per cent or higher likely won’t be seen for a few months, after inventories are fully restocked and the tariff effects have spread sector wide.
“that price increase would take months, possibly into the next model year,” said fiorani.
he said forcing companies to move all production to the u.s. will also have a long-term impact on car prices.
“the way the automotive industry works in north america, supplies of parts and vehicles are based on where they’re most efficiently built,” said fiorani. “that sometimes means shipping parts from canada or mexico or the u.s. to vehicles built in other countries.”
“the idea that forcing automakers to locate in the u.s exclusively, means that all the work that has been done to make the supply chain efficient is pushed aside. those parts are invariably going to be more expensive to make.”
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baris akyurek, autotrader’s vice-president of insights and intelligence, recently told the windsor star that the “significant price increases” caused by tariffs will push buyers away from the new vehicle market in favour of used cars.
he said the shifting demand toward used vehicles cars will also cause prices to climb in that market.
fiorani made a similar prediction.
“we’re already seeing a lot of the new car market being shifted to used cars as the average price of a vehicle continues to creep up,” he said. “people just can’t afford $70,000 vehicles. when the average price is growing faster than the incomes of especially lower-wage people, they’re going to be forced into used vehicles. that’s not going to slow down because of the tariffs.”
— with files from dave waddell
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