If you’re thinking about buying a car, this might be a challenging time. The 25% tariffs on imported products from Canada and Mexico proposed by President Donald Trump could directly impact the automotive industry and, consequently, vehicle prices.
These tariffs have been postponed until April, but a second set of 25% tariffs on steel and aluminum is already in effect, impacting car manufacturers.
This scenario creates an unstable market for consumers, as they face high prices for new vehicles and elevated financing rates. But what does this really mean for those looking to buy a car in 2025?
How Could the Tariffs Affect Car Prices?
If the tariffs go into effect as planned, the average price of a new car could increase by $4,000 to $10,000, with an even greater impact on electric vehicles, according to estimates from the Anderson Economic Group. Currently, the average price of a new car already ranges between $45,000 and $48,000, making the purchase even more challenging.
The impact may vary depending on the model and the origin of the parts, but instead of passing the price increase directly to certain vehicles, the industry tends to distribute the costs across the entire production line. This way, any model could become more expensive, regardless of its origin.
Additionally, some models that become too expensive for consumers might be discontinued, reducing the available options in the market.
Is It Worth Buying a Car Now?
The uncertainty surrounding the implementation of these tariffs makes it difficult to predict the best time to buy a car. There are still no guarantees about when—or if—the tariffs will go into effect, making the purchasing decision a game of patience and strategy.
If you were already planning to buy a car in the coming months and found the ideal model at a good price, it might be worth making the purchase before prices rise. However, it is essential to research thoroughly, compare prices, and assess your budget before making any decisions.
For those considering electric vehicles, this might be a good time to buy, as some models still qualify for federal tax credits of up to $7,500. However, before investing, it’s important to evaluate whether an electric car fits your lifestyle, taking into account factors such as charging station availability and vehicle range.
What About Used Cars?
The expectation is that used car prices will also rise. With the possibility of tariffs driving up new vehicle prices, dealerships may increase their used car inventories, further pushing prices up. Additionally, due to a reduced supply of lease returns in recent years, there are fewer nearly-new vehicles available on the market, making this option even more expensive.
If you’re planning to buy a used car, be prepared to pay more or consider older models to find an affordable price.
Is Consumer Protection at Risk?
Another concern for those financing a vehicle is consumer protection. During the Trump administration, there were attempts to reduce the scope of the Consumer Financial Protection Bureau (CFPB), which oversees financing practices, including auto loans. Despite political changes since then, consumers should remain vigilant for hidden fees and abusive clauses when signing a contract.
Additionally, a new Federal Trade Commission (FTC) rule aimed at increasing transparency in car sales was struck down in January of this year by a federal appeals court. This rule was intended to make pricing clearer and save consumers billions of dollars. With its repeal, thorough research and negotiation become even more important before finalizing a purchase.
How to Prepare for a Car Purchase?
Given this uncertain scenario, some strategies can help:
Research Prices and Conditions
Before visiting a dealership, compare prices and determine which model best fits your budget.
Check Your Credit Score
Having a good credit history can secure better financing terms.
Get Pre-Approved for Financing
This can help in negotiations and prevent surprises with high interest rates.
Consider Negotiating Online
Some dealerships allow price negotiations via email or messaging, which can simplify the process.
Conduct a Thorough Inspection
If buying a used car, request a detailed vehicle history report and have it inspected by a trusted mechanic.
Where to File a Complaint if Problems Arise?
If you encounter difficulties or suspect abusive practices, you can file a complaint with the Consumer Financial Protection Bureau or seek support from state consumer protection agencies.
Conclusion
Buying a car in 2025 may become more expensive due to Trump’s proposed tariffs and rising vehicle prices. To make the best decision, it is essential to research, compare prices, and evaluate all available options.
If price increases do happen, acting quickly might be the best strategy to secure a good deal.
