Car and Car Repair Prices Expected to Jump With New Tariffs

Twenty-five percent tariffs on imported cars are now in effect in the U.S.

As the New York Times reported Thursday (April 3), it’s a policy that President Donald Trump argues will lead to investments and jobs in the American car industry. Analysts, meanwhile, say the levies will drive up the price of new vehicles by thousands of dollars.

The tariffs apply to all cars assembled outside the U.S. Beginning next month, it will also affect imported auto parts, driving up the cost of both assembling and repairing a car, the report said.

The duty on parts is expected to drive up the cost of cars assembled in the U.S., as most of these vehicles contain components made overseas, often comprising more than half the cost of the car, the NYT added.

But even consumers who don’t buy new cars will be affected, as the tariffs will drive up the prices of things like tires and oil filters.

Michael Holmes, co-CEO of auto repair chain Virginia Tire and Auto, told the NYT that he and his suppliers would, at least initially, try to absorb most of the price increases.

“That’s not sustainable,” he added. “It’s magical thinking to think businesses won’t pass this on.”

According to the report, analysts also say the tariffs could lead to price increases for used cars, by raising demand for those vehicles when newer models become less affordable.

As noted here earlier this week, the tariffs could — according to more aggressive estimates — raise the cost of vehicles by $10,000 or $20,000, while also putting enough pressure on consumer real purchasing power and spending to lower economic output by 0.2 percentage points.

From the White House’s perspective, the tariffs are needed to stop imports from hurting the U.S. industrial base and to ease threats from global supply chain vulnerabilities. Trump has said that his efforts have caused carmakers to cease producing cars in other countries and to bring their plants back to the U.S.

But while moving more production stateside could offset the impact of the tariffs, observers say a shift like that would be costly, and would not happen overnight.

“Automotive supply chains were built over decades to optimize production costs,” Nichole Hammond, senior portfolio manager at Angel Oak Capital, told Bloomberg News last week. “It will take years to re-shore to the U.S. if companies choose to do so.”

The post Car and Car Repair Prices Expected to Jump With New Tariffs appeared first on PYMNTS.com.