Those looking to buy a new car, insure their current vehicle, or pay for repairs in the coming weeks could be met with higher prices due to tariffs implemented by President Donald Trump.
Trump’s 25% tariff on all imported vehicles is set to go into effect in early April. The tariffs will also apply to key imported auto parts, including engines, powertrain parts, and electrical components. The move comes just weeks after Trump’s tariffs on imports from China, Canada, and Mexico went into effect.
The price of car parts will go up by more than 25%, which will affect the majority of vehicle prices since many, including ones built in the U.S., use parts from Canada and Mexico. Car prices will go up for around 90% of new cars made in North America, according to Matthew Metzgar, an economics professor at UNC Charlotte. A recent study suggested that some car prices, particularly full-size trucks and SUVs, could go up by as much as $10,000.
Increased demand is also expected to hike used car prices. “Let’s say you roll forward nine months and the new 2026 models are coming out, and they’re all $5,000 to $10,000 more expensive. Well, then a lot of people just go into the used car market, and so you’ll see more demand for that, and certainly the same supply,” Metzgar said.
Car dealers typically keep a 75-day supply of cars at all times, meaning the cars currently on dealer lots should be unaffected, according to Kelley Blue Book. However, once that supply runs out, newer cars imported will come with higher price tags.
Since a big chunk of car parts are imported from Canada and Mexico, the price to repair cars will increase, which will lead to a spike in insurance rates, Metzgar said. A recent analysis found that insurance rates could climb by 8% by the end of 2025, bringing the national average annual cost of car insurance from $2,313 to $2,502. “If your vehicle is worth more, then the cost to repair it is going to be higher,” said Metzgar.
Tariffs will not only harm consumers, they could lead to layoffs for people working in the auto industry. North Carolina is home to more than 470,000 manufacturing jobs, including auto manufacturing, and experts say tariffs will increase costs for car companies, which will lead to higher prices and more layoffs.
