Tariffs make cars more expensive, and the effect is not limited to imports. Models from Resources for the Future put the average increase at about 4% to 11%, or roughly $2,000 to $5,000 per vehicle, depending on how broad the tariffs are. Used cars feel it too, mostly through the pull of shoppers who are priced out of new ones. Here is how the mechanism works, what the current numbers say, and what you can do about it before you sign anything.
TL;DR
- A 25% tariff applies to imported passenger vehicles and light trucks, with lower rates for the EU, Japan, South Korea and the UK. Modeled price effects range from about 4% to 11% on the average vehicle, and far more on imports.
- Tariffs lift prices on domestic models as well, because buyers shift toward lower-tariff vehicles and automakers can price into that demand.
- Used cars move less than new ones. Research on 2025 listings found foreign-brand used cars rose only about 0.2% to 0.6% relative to domestic brands, with the biggest effect on newer used models.
- Your best defenses are a wider shortlist, a clean inspection, a pre-approved loan and a clear view of dealer fees.
Table of Contents
- What tariffs on cars actually are
- How much more do new cars cost?
- What tariffs do to used-car prices
- Luxury and European cars: a special case
- Our perspective
- Eight ways to protect your budget
- When will you see the effects?
- Looking for a used luxury car right now?
- FAQ
- Sources
What tariffs on cars actually are
A tariff is a tax charged when a product enters the country. The importer, usually an automaker or its U.S. arm, pays it to U.S. Customs and Border Protection. The buyer never sees a line item for it. Instead, the cost shows up in the sticker price, in the discounts a manufacturer decides not to offer, and in the options a dealer chooses to stock.
According to the CBP tariff overview from February 2026, the current structure looks like this:
| Product | Rate | Effective from |
|---|---|---|
| Passenger vehicles and light trucks | 25% | April 3, 2025 |
| Auto parts | 25% | May 3, 2025 |
| EU, Japan and South Korea autos and parts | 15% | Under their trade arrangements |
| UK autos | 10%, within tariff-rate quotas | Under the UK arrangement |
| UK auto parts | 10% | Under the UK arrangement |
There are carve-outs. The same CBP overview lists exemptions from the 25% tariff for USMCA-eligible autos and parts that are at least 25 years old as of February 2026. For other USMCA-qualifying vehicles, the presidential proclamation allows the 25% to apply only to the non-U.S. content once the importer submits documentation. If CBP finds the U.S. content was overstated, the 25% applies to the full value of all same-model vehicles that importer brought in.
The practical takeaway: "imported" is not a clean category. A car assembled in Mexico or Canada may be taxed on part of its value, a car assembled in Ohio may carry tariffed parts, and a car from Germany or Japan faces a lower negotiated rate than it would at 25%.
How much more do new cars cost?
No one can give you a single number, because the answer depends on which tariffs stay in place and how automakers respond. Two academic models give a useful range.
- Resources for the Future (May 2, 2025): average vehicle prices rise about 4% to 11%, or roughly $2,000 to $5,000, depending on the scenario. Imported vehicles climb the most, by about $8,800 (nearly 19%) in the most stringent case. The same report estimates that a 25% tariff on non-North American vehicle and parts imports would cut total sales by about 1 million units because of the higher prices.
- The Budget Lab at Yale (March 28, 2025): a 25% auto tariff raises overall automobile prices by 13.5%, about $6,400 on an average new car of roughly $48,000, and raises imported-model prices by 31%.
The two models differ because they make different assumptions about how much cost the automakers absorb, how much gets passed on, and how much of the supply chain is affected. Treat them as a range of plausible outcomes, not a forecast for the car on your shortlist.
Why domestic models get more expensive too
This surprises many buyers. Resources for the Future explains that tariffs work through two channels: higher supply costs, and demand shifting toward lower-tariff substitutes. When a imported compact gets pricier, shoppers look at a domestic competitor. That extra demand lets the domestic maker hold its prices firm, trim incentives or raise them modestly. A truck built in Michigan can therefore get more expensive without being tariffed itself, and it can also rise through the cost of tariffed parts inside it.
What automakers do about it
Manufacturers have several levers, and they rarely pull just one: absorb part of the cost for a time, raise list prices gradually, cut discounts and financing incentives, move trim levels around so that the cheapest version disappears, or shift production. Analysts at Cox Automotive said in a late 2025 webinar that they expect prices to rise and sales volumes to slip by low single-digit percentages, driven mainly by tariff-related price increases. Gradual is the key word: many buyers feel tariffs as a reduced incentive or a missing base trim rather than a headline price jump.
What tariffs do to used-car prices
Used cars are not tariffed when they change hands between Americans. The vehicle was imported years ago, or built here, and the tax was paid at the border once. So the effect is indirect, and smaller.
A 2026 working paper from Drexel University's business school found that the 2025 automotive tariffs raised foreign-brand used-car listing prices by about 0.2% to 0.6% relative to domestic-brand vehicles. Three details matter for shoppers:
- The effect is small. Fractions of a percent on a $25,000 car are a few dozen to a couple of hundred dollars.
- Newer used cars move the most. They are the closest substitutes for new cars, so they absorb displaced demand first.
- Perception drives it. The paper reports that the price gap followed brand perception, not where the specific car was actually assembled. A foreign-badged car built in Alabama was priced like an import.
The lesson for buyers: the model year and brand reputation matter more than the factory location when you read a listing, and the older the car, the less tariffs touch it. Demand is the other part of the story. When new cars get dearer, more shoppers move into one- to three-year-old used inventory, and that competition can firm up prices on exactly the cars you might want. If you want to see the stakes from another angle, an inspection specialist has written about how tariffs could push up used car prices and why checking condition before you pay a premium matters.
Luxury and European cars: a special case
Luxury buyers see tariffs differently. Many premium models are imported, so they sit squarely in the tariffed group, but the rate depends on origin. Under the CBP overview, vehicles from the EU, Japan and South Korea face 15% rather than 25%, which covers most German, Japanese and Korean premium brands built in their home countries. Cars built at U.S. or Mexican plants have their own treatment.
Because the price of a new luxury car is high, even a mid-single-digit percentage increase is a four-figure sum, which is part of why late-model used luxury cars have drawn attention. A three-year-old premium sedan that already took its depreciation hit can offer the same engineering and cabin for much less than a new one that has just been repriced. Our guide to top premium European cars for U.S. buyers covers which models hold up well, and our piece on unique foreign-market car models is worth a look if you are hunting for something uncommon.
One more piece of the rules is useful to enthusiasts. Cars at least 25 years old can come in under a separate regime, and the CBP document lists an exemption for USMCA-eligible vehicles of that age. We explain what that covers, and what it does not, in our 25-year import rule guide.
Our perspective
We sell used and luxury vehicles in Fort Lauderdale, and the conversations we have with buyers have changed in one specific way: people now ask about timing and about what they can control. Most cannot control a tariff. They can control how much car they buy, what they pay in fees, what they finance at and whether they know the car's condition.
Our view is that tariff headlines are a reason to shop with a plan, not a reason to panic. Rushing into a purchase because of a news cycle is how people overpay on a car, a loan or a stack of add-ons. A well-chosen pre-owned premium vehicle, one that has already absorbed its steepest depreciation, often delivers more value than a new model whose price is being pushed from several directions. We would rather help you find the right car at a fair number than win a sale in a panic.
That is the reason we built our approach around personal vehicle finding. If the model you want is scarce, or the trim is hard to locate, we search for it instead of leaving you to scroll listings.
— Allen
Eight ways to protect your budget
You cannot negotiate with a tariff. You can negotiate nearly everything else.
- Widen the brand list. Since demand shifts toward lower-tariff vehicles, the cars everyone suddenly wants get firmer prices. Add two or three comparable alternatives to your shortlist and let the price decide.
- Look one model year older. The newest used cars are the closest substitutes for new ones and move the most. A car a year or two older can cost noticeably less for a nearly identical experience.
- Get the out-the-door price in writing. Sticker prices and advertised prices leave out fees. Our dealer fees playbook walks through what is normal, what is negotiable and what to ask for.
- Shop your financing before the dealer does. A lower rate can offset a price increase. See how to compare auto loan offers and which loan structures fit different budgets.
- Inspect before you pay a premium. When used prices firm up, condition matters even more, because you are paying more for the same car. A pre-purchase inspection is cheap relative to the price of a missed problem.
- Value your trade-in at the same time. If you are replacing a car, get a trade-in number early so you can judge the real change in cost. If you are away from home, our trade-in road guide explains the process.
- Consider buying out of state. If a distant listing is priced well below local ones, the savings can survive the paperwork and shipping. Our breakdown of the real cost of buying out of state and how to avoid inflated shipping markups shows how to check.
- Time the purchase to the calendar, not the news. Seasonal patterns often matter more than headlines. See our notes on the best time to buy a used car.
When will you see the effects?
Tariffs do not hit prices all at once. The pattern in most estimates is a delay: importers hold inventory bought before the tariffs, automakers spread costs over model-year changes, and incentives get trimmed quietly. Cox Automotive's own commentary has suggested that dealers were less worried about tariffs as time passed, even as prices climbed. That fits a slow-moving effect rather than a single shock.
Rules also change. Rates, exemptions and country deals have all been adjusted since the 2025 tariffs began, so check the current CBP guidance before relying on any specific rate. Treat any single-date prediction with caution, including ours. What stays true is the direction of pressure: higher costs for tariffed vehicles and parts, more demand for alternatives, and a used market that follows new-car prices at a distance.
Repairs deserve a mention too. Parts are tariffed along with vehicles, and the CBP overview shows the 25% rate on parts from May 3, 2025. Over time, that can raise the cost of collision work and maintenance, which is one more reason to compare ownership costs and not just purchase prices.
Looking for a used luxury car right now?
If you are weighing a new, pricier model against a well-kept pre-owned one, start with what we have on the lot. Browse our full used inventory, narrow it by body style such as SUVs or sedans, or tell us what you want and let our Car Finder service look for it. We also handle trade-in valuation and financing options, so you can see the full picture in one place. Documentation fees apply, and we are happy to explain them before you commit.
FAQ
Are cars more expensive with tariffs?
Yes, on average. Resources for the Future's modeled scenarios raise average vehicle prices by about 4% to 11%, and imported vehicles rise much more. The size of the increase depends on which tariffs apply and how automakers respond.
Do tariffs raise used-car prices?
Slightly. Research from Drexel University found that 2025 tariffs raised foreign-brand used-car listing prices by about 0.2% to 0.6% relative to domestic brands, with the strongest effect on newer used cars. Older vehicles are far less affected.
Will a domestic car avoid the tariff increase?
Not entirely. Domestic models contain tariffed parts, and demand shifting away from pricier imports lets domestic makers hold prices or trim incentives. A U.S.-built car is usually less exposed than an import, but it is not immune.
What is the best way to save money while tariffs are in place?
Widen your shortlist, consider a slightly older model year, get an out-the-door price in writing and arrange your own financing before you visit a dealer. Those four steps usually save more than any attempt to guess the timing of a price change.
Sources
- Import Tariffs and the Market for Vehicles, Resources for the Future
- U.S. Tariff Overview, February 2026, U.S. Customs and Border Protection
- Adjusting Imports of Automobiles and Automobile Parts into the United States, The White House
- The Fiscal, Economic, and Distributional Effects of 25% Auto Tariffs, The Budget Lab at Yale
- Perceived Protection: Tariff Spillovers to Product Markets, Drexel University
- Tariffs push prices up, auto sales down in 2026, Wards Intelligence
- How new tariffs could drive up used car prices