Car shopping may be especially challenging this year.
President Trump’s threatened 25 percent tariffs on goods imported from Canada and Mexico would deal a major blow to the auto industry, whose supply chains extend across U.S. borders into both of those countries. Those tariffs have been paused until April. But a second set of tariffs, 25 percent on imports of steel and aluminum, took effect this week, and those will also hit car manufacturers.
The whiplash has left the American automobile industry in a state of turmoil. That translates to a daunting market for car shoppers, who are already rattled by the high cost of new vehicles and the expensive loans to buy them.
What impact could tariffs have on car prices?
If the delayed tariffs take effect as now scheduled, new car prices could increase $4,000 to $10,000, and even more for certain battery-powered electric vehicles, according to estimates from Anderson Economic Group, a consulting firm in East Lansing, Mich. (The estimate doesn’t include the impact of the metals tariff.) While prices have moderated since the pandemic years, cars remain expensive. The average transaction price for a new vehicle is about $45,000 or more than $48,000, depending on the data source.
“It’s a crazy situation for consumers, and even more difficult for manufacturers,” said Patrick Anderson, chief executive of the Anderson firm.
The impact of the tariffs would vary by car model, since some rely more on imported parts than others. But rather than vastly increasing the price of specific vehicles, the industry is likely to spread increases across all types — “like peanut butter” — to smooth out the price increases, said Tyson Jominy, vice president of data and analytics at the market research firm J.D. Power. Mr. Anderson said manufacturers would “almost certainly cut back” on models that became significantly more expensive.
What if I want to buy a car this year?
Much remains uncertain, including whether the delayed tariffs will actually go into effect and, if so, how long they would stay in place. “We literally have no idea,” said Joseph Yoon, consumer insights analyst at the automotive site Edmunds.com. So if a new car wasn’t on your radar, there’s no need to rush to buy one, he said. A car is an expensive purchase. It’s important, he said, to take time to research models and get one that fits your needs and your budget. “Don’t panic-buy a car valued at $47,000.”
Still, if you were planning to shop for a new car in the next few months anyway, and the model with your preferred features is available now, it may make sense to buy sooner rather than later. Jennifer Newman, editor in chief of the online car shopping site Cars.com, said that inventories of new cars were plentiful and that tariffs shouldn’t affect vehicles that were already sitting on sales lots. “If you’re thinking about buying a car, you need to be shopping now,” she said.
And if you’re interested in an electric vehicle or a plug-in hybrid, now could also be a good time to consider one because you may qualify for a federal tax credit of up to $7,500 if you buy or lease a new one. (The Trump administration has said it aims to reduce or repeal the credit, although Mr. Trump also went on television this past week to announce he is buying a Tesla.) But make sure an E.V. truly “suits you,” said Jake Fisher, senior director of the Consumer Reports auto test center. Weigh factors like how far you typically drive, he said, and whether you’ll have access to a charger at home or at work.
Are used cars a better option?
Used cars are also expected to get more expensive. Dealers, anticipating potential disruptions in the new car pipeline, are likely to step up purchases of used cars to stock their lots, Mr. Jominy said, and that will help to drive up used car prices.
A quirk of the car leasing market is also expected to contribute to a tighter supply of the most desirable used cars — typically, those that are less than five years old. Many car leases last 36 months, and drivers often return them to the dealer when the lease ends, making them available for purchase. But three years ago, in 2022, there weren’t many cars available to lease because of chip shortages and other pandemic-related factors, Mr. Yoon said. So that means fewer off-lease cars are available for sale this year, which tends to raise prices.
All of which means that if you’re in the market for a used car, you may pay more for a gently used vehicle or have to consider an older one. The average used car was listed for about $25,000 in January, according to the Kelley Blue Book, a used-car price guide.
What’s happening with consumer protections for car shoppers?
The Trump administration has moved to hobble the Consumer Financial Protection Bureau, the watchdog agency that oversees consumer loans, including automobile financing, by laying off staff and seeking to limit its funding. (The efforts are being challenged in court.)
The bureau had previously been assertive in scrutinizing auto lenders. In 2023, under the Biden administration, the bureau ordered Toyota Motor Credit, the company’s U.S.-based auto financing arm, to pay $60 million for withholding refunds when consumers canceled add-on products like gap insurance. The bureau also accused the lender of falsely reporting that borrowers had missed payments, resulting in “tarnished” credit reports.
And last year, the agency flagged illegal practices at auto finance companies, including repossessing cars even after borrowers had made timely payments or received loan extensions.
Separately, a new rule adopted by the Federal Trade Commission that was aimed at protecting car shoppers from hidden fees and bait-and-switch pricing tactics at dealerships had been scheduled to take effect last summer but was struck down in January by a federal appeals court. The F.T.C. had said the so-called CARS rule, short for Combating Auto Retail Scams, would make it easier for people to shop around based on a car’s actual price, and would save buyers an estimated $3.4 billion a year.
How should I prepare to buy a car?
“Buying a car is always a tricky thing to do,” said John Van Alst, a senior attorney at the National Consumer Law Center, and uncertainty around the impact of tariffs “really makes it difficult.”
Nevertheless, he said, some common-sense rules for buying a car still apply.
Before heading to the dealership, research the cost of your preferred model and features. Check your credit report ahead of time and get preapproved for a loan from a bank or credit union so you can compare terms and won’t feel pressured to accept the dealership’s offering.
Ms. Newman at Cars.com said that you did not have to negotiate price in person. You can do it by text or email, which can help create a record of the terms offered. Take a copy when you go to the dealer to settle the final details.
When buying a used car, check independently with a vehicle history service like CarFax or AutoCheck to see if the car has been in an accident or damaged in a flood. Don’t simply accept the dealer’s copy in case it’s out of date, Mr. Van Alst said. There’s also a federal database at vehiclehistory.gov.
Check for open recalls at safercar.gov, Mr. Van Alst said. “Don’t buy a car with an open safety recall.”
If the reports turn up no red flags, he said, ask to take the car to both a mechanic and an auto body shop for an inspection to make sure the car is mechanically sound and safe.
Skip dealer add-ons like gap insurance or upholstery protection. “They’re usually a horrible deal,” he said, adding that they are ripe for unfair markups.
Where can I complain if I have a problem?
The Consumer Financial Protection Bureau’s complaint portal remains active, although it’s uncertain if complaints are being processed. You can also complain to state consumer protection offices, which are often run by the state attorney general’s office.
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