"Tariffs Are Here, But Car Prices Aren't Rising. Should You Buy Now?"

The Tariff Reality Check That Nobody Expected

Here's something that has industry analysts scratching their heads: 25% tariffs on imported cars went into effect back in April, yet car prices haven't skyrocketed like everyone predicted. The average price for a new car is $48,699 in June 2025, and new car prices have remained near record highs since 2022.

According to Cox Automotive's Kelley Blue Book, the average transaction price (ATP) paid for new vehicles held steady from April to May at $48,799. It's like watching a tsunami warning that never turns into a wave - at least not yet.

As a result, industry analysts expect consumers to see higher car prices, and some buyers have been rushing to the dealerships in anticipation of future sticker shock. But here's the twist: prices have mostly stayed put, creating one of the most confusing car-buying environments in recent memory.

Think about it - when was the last time economists predicted doom and got it half right, half wrong? That's exactly what's happening now with car prices, making this a perfect storm of opportunity and uncertainty for anyone thinking about buying a vehicle.

Why March Was Absolutely Bonkers for Car Sales

Initial industry estimates suggest the month of March ended with a surge in new-vehicle sales driven by consumers jumping in before new tariffs begin to push prices higher. New-vehicle sales in March are estimated by our team at 1.59 million units sold, significantly exceeding the Cox Automotive forecast and the best month for sales volume in four years.

Picture this: you tell someone their favorite restaurant is closing tomorrow, and suddenly everyone shows up at once. Tariff announcements triggered a rush among consumers, who pulled forward purchases in March.

According to ZeroSum's March 2025 report, this urgency increased sales by 11%, or 153,000 units, making it one of the most robust months in recent history. The irony?

All that panic buying might have actually helped keep prices stable because dealers moved so much inventory. However, while April sales improved year-over-year, they were down from March and slowed in the second half of the month, suggesting that the peak of purchases may have passed.

It's like Black Friday energy in the car world, except it lasted an entire month and nobody got trampled - just financially lighter.

Automakers Are Playing Chess While Everyone Else Plays Checkers

Some carmakers are slashing prices in response. Ford, which makes more of its cars in the U.S.

than any other automaker, is offering employee pricing for customers as part of its "From America, For America" promotional campaign. Nissan cut prices on some of its best-selling models such as the Rogue and the Pathfinder, Car and Driver reported, to help buyers face a "challenging car-buying landscape." Think of it as automotive survival mode - instead of raising prices immediately, many manufacturers are absorbing costs and offering deals.

Hours after Trump's tariffs went into effect, Ford announced it will offer its employee discount to all customers. Ford said the sales program — running from April 3 through June 2 — includes "significant savings" but did not release exact details on the discounts.

Meanwhile, others like Hyundai made bold promises. That compares with mainstream automaker Hyundai Motor, which on Friday pledged to not raise prices on its current lineup of vehicles because of potential increases in costs due to tariffs as part of a new "customer assurance" program through June 2.

Smart companies know that pacing yourself in a marathon beats sprinting in the first 100 meters - and that's exactly what we're seeing here.

The Production Pause That Sent Shockwaves

Stellantis NV said on Thursday it was temporarily laying off 900 workers at five U.S. facilities and pausing production at one assembly plant each in Mexico and Canada, after U.S.

President Donald Trump's tariffs were announced. When one of the world's biggest automakers hits the brakes this hard, everyone pays attention.

Stellantis is pausing production at two assembly plants in Canada and Mexico as the company attempts to navigate President Donald Trump's new round of 25% automotive tariffs, the company confirmed Thursday. The actions are the swiftest and most drastic by an automaker regarding the new tariffs, which took effect Thursday and are imposed on all vehicles imported to the U.S., including from Canada and Mexico.

It's like watching dominoes fall - when Stellantis shuts down plants making popular models like the Jeep Compass and Chrysler Pacifica, the ripple effects hit American workers too. Among those to be laid off are 900 US hourly employees who make powertrains and stampings that supply the affected Canadian and Mexican plants, Stellantis said Thursday.

The affected US employees work at five different Midwest plants: the Warren Stamping and Sterling Stamping plants in Michigan, as well as the Indiana Transmission Plant, Kokomo Transmission Plant and Kokomo Casting Plant, all in Kokomo, Indiana.

The Hidden Winners in This Tariff Game

Nine of the 10 cheapest models come from Japanese or South Korean brands, reflecting their ability to produce cheaper, value-driven vehicles. U.S.

auto tariffs, however, are going to make it harder for these brands to succeed. Estimates from Goldman Sachs predict that Mazda could see a massive 59% profit reduction due to the tariffs, while Nissan could see a 56% drop.

But here's where it gets interesting: companies that already build in America are sitting pretty. Toyota and Honda, two of America's top automakers by market share, will avoid most of the damage due to their well-established U.S.

manufacturing operations. It's like having a home field advantage when everyone else is playing away games.

Ford's "From America, For America" campaign isn't just marketing fluff - it's a genuine competitive edge when tariffs make imported cars more expensive. These companies made billion-dollar bets on American manufacturing years ago, and now they're collecting their winnings while competitors scramble to adjust.

Think about the last time being prepared actually paid off this dramatically - that's exactly what's happening here.

Used Car Prices Are Going Absolutely Bananas

Used vehicle prices last month eased from their recent high in April as consumers who may have needed a vehicle but feared price hikes due to tariffs flocked to purchase a car or truck, according to a closely watched barometer of preowned prices. Cox Automotive's Manheim Used Vehicle Value Index — which tracks prices of used vehicles sold at its U.S.

wholesale auctions — decreased 1.5% from April to May, but remained 4% higher than a year earlier. April's level was the highest since October 2023.

Even though used cars don't get hit directly by tariffs, they're riding the wave of new car uncertainty. While the CarGurus Used Car Price Index indicated an average used car price of $27,171 at the beginning of the year, it stood at $27,895 as of June 2.

In other words, CarGurus' data suggests that used car prices have risen by $724, or approximately 2.6% overall, since the start of the year. Therefore, used car prices have rebounded not only to recover from early losses at the beginning of the year but may maintain an upward trend into the summer months, making it hard to expect used car prices to get any better in 2025.

However, new tariffs potentially adding up to $15,000 per new vehicle, along with the general unpredictability of the tariff situation, could send used prices soaring if more buyers are priced out of the new market. It's like musical chairs - when new car seats get too expensive, everyone rushes to the used car section.

The Sticker Shock That's Coming Down the Pipeline

Market research firm Cox Automotive predicts that cars affected by the tariffs could see prices increase 10-15%. Prices of cars not hit by the full 25% tariff could jump 5%.

Think of current prices as the calm before the storm - manufacturers are essentially playing hot potato with tariff costs, and eventually someone has to pay. From a simplified economics perspective, given an average price elasticity for new vehicles of -0.5, and assuming 50% of the tariff cost is passed to customers, average prices could rise from $48,000 to $54,000.

That's not pocket change we're talking about - that's a $6,000 increase that could push millions of buyers out of the new car market entirely. Price hikes of 1% to 1.5% are now expected sometime in the second half of 2025.

The first are being applied to three models assembled at Ford factories in Mexico. The company has told dealers there will be price hikes of several hundred dollars to up to $2,000 on Mustang Mach-E, Maverick pickup and Bronco Sport models built after May 2.

It's like watching a slow-motion train wreck where you know exactly when it's going to happen.

Why Some Cars Are Getting Special Treatment

Central to the automotive industry forecast development is that we expect the light-vehicle 25% tariffs will continue through 2025 for Canada and Mexico. Non-USMCA compliant vehicles will see the 25% applied to the full value of the vehicle.

But here's where it gets tricky - not all cars are created equal under these rules. To qualify, 75% of vehicle content must be sourced from the US, Canada or Mexico, with additional requirements: 40% of core parts and 70% of steel and aluminum must be sourced regionally.

It's like a complicated recipe where you need the right ingredients from the right places, or your cake gets taxed at 25%. The Trump administration has also announced a tariff deal with the United Kingdom that cuts the import tariff on British vehicles and vehicle parts to 10% for the first 100,000 vehicles sent to the U.S.

each year. The tariff climbs back to 25% on vehicles in excess of the base number.

British automakers sent almost 100,000 vehicles, worth $9.8 billion, to the U.S. in 2024.

Some countries are getting better deals than others, creating a confusing patchwork of prices that even dealers are struggling to navigate.

The Inventory Game That Nobody Talks About

Inventory, both new and used, will be a key metric to watch. New-vehicle inventory increased modestly to 2.67 million units toward the end of March, down 2.7% against the same time in 2024.

But a surge of sales pushed days' supply lower to 71, down from 89 a month earlier. Think of car inventory like toilet paper during the pandemic - when everyone rushes to buy, shelves empty fast.

While this top-down pressure should continue into 2025, the relief in pricing will likely meet resistance in an even tighter supply of used vehicles after years of reduced new-car sales volumes, fewer off-lease units returning to the market and an aging trade-in population. The chip shortage-induced new vehicle supply shortage that began with the pandemic is rearing its ugly head — this time in the used market.

Dealers are caught between a rock and a hard place - they need inventory to sell, but importing that inventory just got way more expensive. One reason for the rising prices of used cars is the ripple effect of supply chain shortages.

The U.S. auto industry saw production drop from 17 million vehicles in 2019 to fewer than 14 million in 2022.

As a result, there are only an estimated 2 million three-year-old vehicles available this year, about half of the typical supply.

The Electric Vehicle Wild Card

We expect substantial reductions in battery-electric vehicle (BEV) volumes/market share and adjustments in electrification mix. In 2030, we expect the US BEV mix to reach about 30%, compared with prior projections for about 40% in that year.

Electric vehicles are getting caught in the crossfire of tariff wars, but in unexpected ways. In 2024, electric vehicle market share hovered between 7-9% of new car sales in America.

In 2025, we expect battery electric vehicles (full EVs) to make up 9.5% of new car sales in the United States. We predict that EV incentives will continue to grow, bringing the average selling cost for a new electric vehicle down to $53,000 in 2025.

It's ironic - while gas cars get more expensive due to tariffs, electric vehicles might actually become more affordable through incentives. Shoppers could find great deals on electric cars and overstocked new cars from brands like Jaguar, Audi, Land Rover, and Hyundai.

Think of it as a strange form of market balancing where going green might actually save you some green.

The Import Showdown Nobody Saw Coming

In the year 2024, U.S. imported USD 217 billion worth of cars, from countries such as Mexico, Canada, Japan, South Korea, and Europe among others.

The U.S. has imported USD 49.7 billion and USD 28.3 billion of cars from neighboring countries Mexico and Canada respectively.

These numbers paint a picture of just how interconnected the global car market really is. JLR, which consists of the Jaguar and Land Rover brands, has announced that it's halting imports to the United States, as reported by Reuters.

The pause, which is expected to last for a month, is intended to help the company plan how to address the 25 percent tariffs on U.S. When luxury brands start hitting the pause button on America, you know things are getting serious.

In April 2025, many OEMs began scaling back. Jaguar Land Rover, based in Britain, temporarily stopped exporting its luxury cars to the United States (exports resumed following a U.S.-U.K.

trade deal announced May 8). Stellantis idled factories in Canada and Mexico that make Chrysler and Jeep vehicles, and Audi, the luxury division of Volkswagen, also paused exports of cars to the United States from Europe, telling dealers to sell current inventory on their lots.

It's like watching a global game of chicken where everyone's trying to figure out who blinks first.

Should You Pull the Trigger Right Now?

If you're in the market for a new vehicle, don't wait. A perfect storm of shrinking inventory, reduced incentives, and new tariffs is poised to drive up car prices.

The math is pretty straightforward: prices are holding steady now, but all signs point to increases later this year. When 2025 began, the average transaction price on new and used vehicles was ticking down from past highs, but auto tariffs implemented by the Trump administration in early April were expected to push car prices higher.

As of mid-June, car prices overall have not increased drastically, but many industry experts say price hikes, driven at least in part by tariffs, are still to come. Think of buying a car right now like getting concert tickets - you can pay face value today, or wait and potentially pay scalper prices later.

Some shoppers may see average car-buying incentives of about $3,300. With manufacturers still offering deals to move inventory, you're essentially getting a discount on what might be the last "normal" priced cars for a while.

The question isn't whether prices will rise - it's how much and how fast. The car market right now feels like standing at the edge of a cliff during an earthquake - everything seems stable until it suddenly isn't.

With automakers playing defense, dealers clearing inventory, and tariffs creating uncertainty everywhere you look, the smart money says strike while the iron is lukewarm. After all, when has waiting for car prices to drop ever actually worked out for the average buyer?