Should you buy a new car before auto tariffs take effect on April 3?
Auto tariffs set to take effect within days pose car buyers with a choice: Do they dash out to dealerships ahead of possible price increases totaling thousands of dollars?
Experts who spoke to ABC News urged customers to seriously consider accelerating their purchase plans, though they cautioned buyers against skipping due diligence such as comparison shopping and researching borrower-friendly loans.
It remains uncertain whether price increases will hit as soon as next week or within months when sellers run out of tariff-free inventory, some experts said, but they pointed to such uncertainty as reason to speed up a purchase.
“You’ll see a lot of people going to dealership lots sooner rather than later because they have no idea when or how much the tariffs will hit them in the wallet,” Joseph McCabe, president and CEO of advisory firm AutoForecast Solutions, told ABC News.
The 25% auto tariffs, set to take effect on April 3, will apply to imported passenger vehicles, including cars, SUVs, minivans, cargo vans and light trucks, according to a White House statement released after Trump's Oval Office remarks on Wednesday.
Analysts widely expect the tariffs to raise prices for foreign-made cars, since importers will likely pass along a share of the tax burden to consumers.
Cars produced in the U.S. are also expected to undergo significant price hikes since manufacturers will bear higher costs for imported parts and face an uptick in demand as buyers seek out domestic alternatives, experts previously told ABC News.
“It’s a really complex situation but the bottom line for consumers is that the price of cars will be going up,” Kimberly Palmer, a personal finance expert at NerdWallet, told ABC News.
“If you know you need to buy a car – it’s something you’ve already decided and worked into your budget – then it could make sense to speed up your timeline,” Palmer added.
Aaron Bragman, Detroit bureau chief at Cars.com, put it more succinctly: “Try to get a vehicle now if you can.”
Dan Ives, managing director of equity research at the investment firm Wedbush, predicted general tariff-related price increases for U.S. buyers between $5,000 and $10,000 per vehicle.
The added costs could reach as high as $20,000 per vehicle, Art Wheaton, director of labor studies at Cornell's School of Industrial and Labor Relations, who studies the auto industry, told ABC News in a statement.
The scale and timing of price increases will likely vary depending on whether a model or its parts originates in the U.S., as well as a manufacturer’s assessment of its customers’ capacity to absorb higher costs, some experts said.
A potential surge in demand over the coming days or weeks could also push up prices, adding to the urgency of customers on the sidelines and in turn pushing prices even higher, they added.
“If everybody goes out to buy a car, the prices will certainly go up,” Prasad Venkatesh, senior vice president of research and chief innovation officer at the Center for Automotive Research, told ABC News.
The tariffs are also expected to raise prices for used cars, since higher prices for new cars will send many customers seeking pre-owned options, experts said.
After the tariffs take effect, manufacturers may stop producing some low-priced models altogether, McCabe said, since some carmakers lack sufficient profit margins to absorb the tax cost.
“The vehicles that are in the more affordable range – let’s say below $30,000 – they will potentially be squeezed out of the market,” McCabe said.
The decision to hurry up a car purchase carries risk, however.
High interest rates have pushed up borrowing rates for car loans, meaning customers entering the market may take on stiff monthly payments even if the sticker price is relatively low, some experts said.
Typically, car buyers should run credit reports and address any potential errors as a means of pushing down loan rates, Palmer said, but that process usually lasts a matter of weeks. Comparison shopping can also deliver significant savings but a thorough search for offerings takes additional time.
Auto tariffs will raise the price of car repairs and insurance, making it a costly time to own a car, Palmer said.
“Buying a car is such a big financial decision. It’s expensive and it has a huge impact on your finances, so you don’t want to rush if you’re not ready,” Palmer added.
