New York
CNN
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President Donald Trump’s auto tariffs could send the cost of a new car soaring. Fixing the car you already have will likely get more costly, too.
Trump said Wednesday he is imposing 25% tariffs on car parts coming into the US, in addition to fully assembled vehicles. The tariffs on vehicles are set to take effect on April 3, while the tariffs on parts are set to go into effect no later than May 3, according to the proclamation signed by Trump.
While specific price increases are uncertain, a sweeping 25% tariff on car parts could hike the cost of your auto repair bill. Tariffs are a tax on imported goods, and that price hike is often passed on to consumers in the form of higher sticker prices.
“Tariffs will most certainly cause higher costs in parts, which can constitute up to 40% or more of a repair bill,” said Skyler Chadwick, director of product consulting at Cox Automotive, an automotive services company.
A spokesperson for the American Automobile Association said it was monitoring the situation but noted it is too soon to know the exact impact of the tariffs on the cost of auto repairs.
The supply chain for cars and car parts is a global enterprise, with pieces often crossing borders numerous times before ending up in a US auto dealer or repair shop.
“The parts department in any dealership or repair shop is a United Nations of parts, sourced from all over the world,” Chadwick said.
Trump has proposed tariffs to try and boost domestic manufacturing — a goal that economists say is more difficult and costly than it sounds. Since the 1990s, free trade agreements have made it seamless to move auto parts between the US, Mexico and Canada, lowering costs for automakers and promoting an integrated supply chain.
The sweeping 25% tariffs are set to upend the supply chain for auto parts, causing pricing headaches for auto companies, repair shops and consumers.
Trump’s tariff proposals come at a time when US consumer confidence is declining and inflation concerns are lingering. The average cost of motor vehicle maintenance and repairs in the US has already increased 38% since March 2020, according to data from the Bureau of Labor Statistics, largely driven by auto part supply constraints, labor shortages and more expensive vehicles.
Mark Fields, the former chief executive of Ford, told CNBC on Thursday that different automakers will be impacted in different ways by Trump’s tariffs. It largely depends how much of their original equipment is produced in the US, versus how many car parts they import from elsewhere.
That logic could also apply to auto repair shops trying to source their standard car parts.
In 2024, the US imported $475.4 billion worth of automotive vehicles, parts and engines, according to the latest data from the Bureau of Economic Analysis.
Of that total, $57.08 billion came from Canada and $182.3 billion came from Mexico.
The proclamation signed by Trump includes partial exemptions for certain auto parts that are compliant with the USMCA free trade agreement. The exemptions will only apply to the value of content produced in the US and tariffs will still apply to the value of content produced in Canada or Mexico. Tariffs will go into effect for those parts after Commerce Secretary Howard Lutnick identifies a process for taxing the value of non-US content.
“It is unclear administratively how straightforward this process will be to navigate for auto suppliers, adding to uncertainty,” said David Doyle, head of economics at Macquarie, in a Thursday note.
Chadwick said the timing of cost increases for consumers will also depend on different repair shops’ current inventory levels for parts.
If an auto shop is heavily stocked on a certain part, it could take a while for prices to rise. Yet for parts that are frequently used or managed in lean supply, the impact could be felt within days or weeks after tariffs are imposed, Chadwick said.
“Many vehicle parts are sourced globally, which would increase repair costs for car owners and reconditioning costs for dealers,” said Jessica Caldwell, head of insights at Edmunds.
Cars, repairs and insurance could get pricier
Trump’s tariffs on autos and car parts amount to an “aggressive tax increase for US consumers,” Paul Donovan, chief economist at UBS Global Wealth Management, said in a Thursday note.
There are ways for consumers to limit their exposure to higher costs, experts say. If you are considering a car repair, research the best price points ahead of time.
“If you notice any significant price hikes in the short term, ask the service manager or adviser to explain them,” Chadwick said. “Ask questions about the exact costs of parts versus labor for all repairs and maintenance.”
Even if some parts aren’t affected by tariffs, companies might increase their prices anyway as supplies get restricted while demand remains high.
“Even unaffected suppliers may raise prices to expand margins amidst a reduction in overall supply,” said Wolfgang Alschner, a professor of economic law at the University of Ottawa.
The 25% tariffs on autos would be a “hurricane-like headwind” for automakers and could push the average price of vehicles up $5,000 to $10,000 depending on the make, model and price points, Dan Ives, senior analyst at Wedbush Securities, said in a Wednesday note.
While new cars and repairs could get more expensive, other aspects of autos might as well.
“US consumers will likely hold on to their existing cars for longer, and may switch to buying used cars, so used car prices will rise,” said UBS’ Donovan. He also noted that tariffs could even affect drivers who aren’t buying a car, since the overall higher cost of vehicles will bring up the cost of auto insurance.
