New York
CNN
—
With a 25% tariff about to hit every imported car, many Americans are wondering whether it’s better to buy or lease a vehicle before tariffs go into effect, or wait to see how things will play out.
The simple answer is to buy now, experts say, especially if you are already in the market for a car.
“The riskiest thing to do is to hold off and see what happens,” Aaron Bragman, the Detroit bureau chief of automobile shopping site Cars.com, said to CNN. “We’re fairly confident that costs and prices are going to go up — that’s just the basic economics of tariffs.”
President Donald Trump last week announced a 25% tariff on all cars imported from foreign countries, including Canada and Mexico. The tariff could raise prices between $5,000 to $15,000 per vehicle, depending on the make and model, according to Goldman Sachs estimates. And the Trump administration could further send the automobile industry spiraling if it follows through with its plan to enact tariffs on car parts — since even American-made cars import a significant portion of their parts from Canada and Mexico. That could further slam car buyers if enacted.
For example, cars from Ford, Chrysler, GM and Honda are expected to face cost jumps from $4,000 to $10,000, according to a February estimate from Michigan-based think tank Anderson Economic Group. Electric car buyers are expected to pay at least $12,000 more per vehicle.
Some Americans have already begun rushing to dealerships to buy vehicles before price increases take place. And for those who haven’t made their way to the dealership, there’s still been a spike of interest in car-buying.
Traffic on both Kelley Blue Book and Autotrader.com increased by 30% between last Wednesday, the day tariffs were announced, and Monday, compared to the same time period the year prior. And traffic on the hundreds of dealership sites run by Cox Automotive jumped by 20%.
Jenni Newman, Cars.com’s editor-in-chief, also noted that no vehicle currently on a dealer lot should have a tariff fee until after the tariffs go into effect on April 3.
Bragman did note, however, that finding a deal on a dealer lot could get increasingly difficult because dealers know that prices are going to be higher on incoming inventory.
Inventory is decent, especially compared to the era supply chain shortages during the Covid-19 pandemic. Customers shouldn’t have a hard time finding well-stocked dealer lots, but as time goes on, there may be fewer deals and incentives.
Besides the initial tariff costs, automakers may also start cutting production, simply because demand is likely to wane, Bragman said. That could cause dealer inventory to thin out and prices to increase.
As prices go up, more people will likely look into buying used cars. However, the inventory for used cars is already low, because automakers didn’t produce as many cars during the pandemic and those cars would be in the used marketplace today, Autotrader.com executive editor Brian Moody told CNN. A spike in demand would only exacerbate the used car market.
And for those looking for affordable vehicles, there could be even fewer options available if tariffs continue. There are only 27 new vehicles on the market priced under $30,000, and four have already been discontinued, Cox Automotive analyst Erin Keating wrote in a note on Friday.
Though Keating said cheaper models made up 13% of all vehicles sold in the US in 2024, those models are often the first to get cut. Most cheaper cars, even for American brands like Ford, are not made in the United States and are instead assembled in countries with cheaper labor, like Mexico.
But customers will have about a year to prepare if a car model is discontinued, Moody said, because manufacturers usually have a backlog in their inventory.
What isn’t guaranteed is when exactly those price increases will take place. Even so, automakers are worried about the volatility, Bragman said.
“Frankly, if you can find a vehicle, you can find something that you can afford, we’re telling people to go for it,” Bragman said.
CNN’s Elisabeth Buchwald, Rachel Wilson, Alex Leeds Matthews and Auzinea Bacon contributed to this report.
