When buying a new car, cost is always a concern, and finding something affordable can be difficult. While this has always been true, with the implementation of new 25% automotive tariffs by President Donald Trump, vehicle prices could increase by up to $10,000. Tariffs are essentially taxes on imported goods, and since many vehicles and vehicle components are made outside of the United States, they can have a massive effect on the automotive industry. If you are planning on buying a new vehicle in the near future, it is a good idea to understand these tariffs and why you might be facing price hikes for your next vehicle.

What Are Auto Tariffs and Why Are They Being Proposed?

The auto industry is an incredibly international business. Even vehicles that are made in the United States use components that have to be assembled elsewhere in order to keep prices relatively low. Computer chips and semiconductors, for example, are used in nearly every modern vehicle and they are generally manufactured in Asia where the infrastructure is already in place for production. Tariffs on goods coming from these countries could easily raise the prices of new vehicles.

The tariffs are being proposed as part of an objective to bring more manufacturing jobs to the United States. The idea is that with these large increases in import costs, manufacturers will be forced to move production to domestic factories, so American workers have more opportunities. While this seems like a plan that makes sense, the reality is that in the meantime, the American consumer will be the one footing the bill.

How Much Could Car Prices Rise?

Trump’s tariffs on imported automobiles and automobile components are going to be 25%, which is a significant rise in costs for manufacturers. Because of this, car prices could go up by as much as $10,000. While imported vehicles will see the highest increase, the tariffs will also impact the cost of domestically built cars, most likely by a few thousand dollars for car buyers. It is unclear when Americans might see this increase in price, but it will have a lasting effect across the entire automotive industry.

Which Automakers and Models Could Be Most Affected?

Nearly every manufacturer and automotive brand will be affected by the tariffs, but some will feel the impact much more than others. Honda, Mazda, Kia, and Nissan all assemble vehicles in Mexico, while Volvo assembles many of its vehicles in China. In order to import these cars into the United States, they will have to pay the 25% tariff, which will be passed on to the consumer.

Even brands that are thought of as strictly American, like Ford and Chevrolet, will be affected by auto part tariffs. Ford, in particular, uses transmissions made in Mexico, while other automakers use components like airbags and seatbelts made by large conglomerates operating out of Canada and China. Rather than source new domestic manufacturers, which will be more expensive anyway, the brands will most likely pay the tariffs and simply charge more for vehicles at the dealership.

One of the bright spots in the tariff implementation is an exemption for carmakers on things like aluminum and steel. Car brands will not have to pay an additional 25 percent for raw materials that are imported since there are no options domestically for things like sheet metal. Paying this additional tariff would completely disrupt the industry so this exception is good news for both consumers and manufacturers.

The Ripple Effect on Used Cars and Financing

While the new tariffs will have the biggest impact on the supply chain and MSRP of new cars, there will also be a ripple effect throughout every aspect of the industry. Consumers may even see an increase in interest rates due to the larger loan amounts. When customers are taking out larger loans, the banking system uses this as leverage to increase interest rates in order to make up for losses on the higher loans that don’t get paid off. In addition to the higher sticker price, you may also end up paying much more overall for your car if you plan on financing it.

On top of increasing the price of new cars, tariffs can also affect the price of used cars. Since new vehicles will be so much more expensive, the demand for used vehicles will increase exponentially. Used cars that were previously worth only a fraction of what they cost when they were new could see a massive increase in their resale value. These ripple effects mean that the tariffs will have far-reaching effects that go beyond higher operating costs for auto manufacturers.

How Auto Protection Plans Can Help Offset Rising Ownership Costs

With the new tariffs going into effect, it is important to save as much money on your vehicle as possible. Whether you are thinking of making a purchase or you want to make sure that your current car lasts as long as it can, so you don’t have to make a trip to the dealership, upkeep is crucial. Getting repairs done as soon as a problem arises instead of waiting and letting it get worse is the key to longevity, and a protection plan is a great way to stay on top of your vehicle’s condition.

An extended auto warranty, which is more accurately called a vehicle service contract (VSC), can help you protect your car after the original manufacturer’s warranty has run out. With a VSC in place, you don’t have to worry about dipping into your emergency fund when your car starts making a funny noise or breaks down on the side of the road. As long as the repair is covered under your particular plan, you can get help paying for it and avoid the high prices of a new car.

Endurance offers a wide range of vehicle protection plans that are designed to provide excellent coverage for all kinds of cars and drivers. Whether you have an older high-mileage vehicle or a top-notch luxury car, Endurance has a plan for you. Endurance even covers vehicles that other third-party providers won’t, such as Canadian Gray Market cars, vehicles with a rebuilt or salvage title, and cars used for commercial purposes like rideshare or delivery. With an Endurance plan in place, you can rest easy knowing that you won’t have to deal with higher sticker prices if your car breaks down.

Protect Your Car and Save Money With Endurance

With car prices and the demand for vehicles rising, it is important that you keep your current car in great shape for as long as possible. With an auto protection plan from Endurance, you can be sure that no matter what happens with your current car, you can keep it running and avoid having to make a new car purchase at an inflated price. With customizable plans for vehicles of all kinds, you can drive with confidence and keep your costs down.

In addition to top-of-the-line coverage, Endurance Warranty customers also get a wide range of standard benefits to help keep them safe on the road. These include things like 24/7 roadside assistance, towing service, rental car coverage, and travel interruption coverage. Plus, for a small activation fee, you can also get access to Endurance’s Elite Benefits, which include tire repair or replacement, key fob replacement, windshield coverage, and more.

If you are ready for the help you need to keep your vehicle on the road, get in touch with our award-winning customer service team at (800) 253-8203 for a FREE quote. You can also shop online for an instant price preview so you can make the best decision.

For more information on all things automotive and helpful resources like this one, be sure to check out the Endurance Warranty blog. There, you will find tips and tricks, provider comparisons, mechanical breakdown insurance information for California drivers, and more.