Is it pointless to know why they are rushing to buy a car before tariffs hit?

New car rates are beginning to take effect in April and May. Some uneasy buyers are rushing to the dealer to make a purchase, but a purchase today doesn’t necessarily guarantee a significant deal, some experts said.

Since 2019, prices for new and used cars have skyrocketed. US tariffs on automobile imports have put new pressure on already difficult markets. Some experts argue that prices will inevitably rise, while others have proposed a more cautious approach.

One Auto Market Observer told the Epoch Times that buyers who fear price increases should not buy based on emotions.

Karl Brauer, executive analyst at Car Search Engine and Price Aggregation Service ISEeCars.com, said in an email that both car manufacturers and dealers will “have repeated potential price increases and increase sales in the short term.”

“They don’t know exactly how tariffs will be generated in their pricing structure,” Brower said. “Higher future vehicle prices are possible, but they are not guaranteed and buyers should never be driven by fear or intimidation.”

Charles Benoit, a trade adviser to the prosperous American Union, predicts that increased capacity will lower car prices if tariffs succeed in reverting production to the US and encouraging consumers to buy America.

Recent sales data nevertheless show that consumers are a bit scared of the potential impact of the 25% tariff on completed cars enacted in April.

New vehicle sales have risen 22% over the first week of April compared to the same period in 2024, according to data shared by Cox Automotive chief economist Jonathan Smoke.

Sales of cars used in that time frame have risen 12%, he said.

In a presentation on April 16th, Smoke said these purchases are likely to be driven by consumers who want to beat the tariff-related price increases. COX data shows that this activity is pushing down the available supply of both new and used cars at dealer lots across the United States.

According to Cox’s inventory data, foreign brands such as Lexus, Toyota, Honda and Subaru were selling the fastest, while American brands Dodge and Ram were the longest to sell.

Restore production

President Donald Trump, whose administration imposed new tariffs to boost domestic industries, said on April 2 that tariffs on cars were needed at the White House. In his speech, Trump said tariffs would counter actions by foreign states that “devast our industrial base and put national security at risk.”

Benoit told the Epoch Times that the Trump administration’s actions should not have been a surprise. Rather, the first Trump administration recommended that similar tariffs be assessed on completed vehicles in 2019.

Currently, Benoit said imported cars account for more than half of the American car market. While US trade policy allows this spread of this import, other countries are buying insignificant amounts of American vehicles. The car factory operates at a capacity of less than 60%, he said.

Six of the top 25 top 25 cars in the US were models created by US-based companies, according to sales data published by Car and Driver in 2024.

If tariffs succeed in attracting production to the US, Benoit expects consumer prices to fall.

He said the tariffs already benefited the automotive sector. Foreign automobile companies are adjusting plans to move production to the US or dial back foreign production.

Recently, Honda Motor Co., the second-largest Japanese car manufacturer, said on April 16 that it would only create a five-door citizen hybrid model in Indiana, rather than producing it in Japan and the US.

On April 4, Dodge, Chrysler, Jeep and Dutch Stellantis NV, which manufactures RAM models, said it was temporarily neglecting plants in Mexico and Canada as it assessed the impact of tariffs. Stellantis also announced that it will temporarily fire 900 workers in Michigan and Indiana.

Brower said all automakers can quickly add capacity by simply adding another shift to their U.S. facilities, but the overhaul required to fully address the changes required by the new tariff schedule can take years.

“It’s difficult for all automakers when tariffs change suddenly with almost warning,” Brower said. “When that happens, they can’t respond right away.”

Inflationary pressure

In the short term, both Brauer and Stephanie Valdez Streety, directors of industry insights at Cox Automotive, said they believe car rates will significantly increase the costs of both new and used cars.

In addition to direct pricing pressure from completed automobile obligations, tariffs on foreign-made inputs push production costs upwards. Brower said most American cars are made from foreign components.

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In a presentation on April 7th, Smoke said his initial forecast regarding the impact of tariffs was that sales would skyrocket. Manufacturers and dealers will then begin to cut down incentives and discounts aimed at moving new vehicles to ensure relatively stable prices. When parts tariffs come into effect in May, smoke is expected to produce 30%.

Smoke expects long-term reductions in vehicle production and delivery, and some models may be eliminated entirely from the lineup. Total supply for all cars will drop and prices will rise.

Streaty told the Epoch Times that vehicle costs are likely to increase by 11% on average.

“Consumers will have to pay more,” Valdes Streetie said. “This isn’t a good thing, because vehicles are very expensive and out of reach for the average household.”

The range of price increases depends on the type of car you purchased, Brower said. In an analysis he shared with the Epoch Times, ISEECARS estimated that tariffs would increase the price of America’s most popular new cars from $6,000 to $16,500.

Brower said these higher prices resulted in lower demand for new cars and higher demand for lower-priced used cars.

Tariffs also put upward pricing pressure on affordable vehicles manufactured by foreign automakers, Valdez Streety said. She said consumers looking for cars under $30,000 are at the highest risk of getting a price from the car through a new mission.

Few affordable options

Rising car prices is bad news for most Americans. Since 2019, prices for new and used cars have risen at a faster rate than overall consumer price inflation and median household income.

“It’s probably a much more challenging environment than ever before… to make the average American earn an average amount to buy a new or used car,” Brower said. “Taxes will only add to that challenge, at least in the short term.”

An industry insights report published by Identifier Cars Commerce stated that the average price for a new car in February was around $48,700. The average price in February 2019 was $37,800, which is a 29% increase over the past five years.

The average price of used cars has increased by over $7,000 over the past five years. In February, the average used car cost $28,500, but in February 2019 it cost $21,300. This is an increase of about 34%.

Observations recorded by the Federal Reserve Bank of St. Louis show that cost of living, measured by the consumer price index, has increased by around 26% over the same period. The index includes food, clothing, shelters, fuel, transportation, service charges and sales tax.

Meanwhile, the median household income has risen from $68,700 in 2019 to $80,600, up about 17% in 2023, according to estimates released by the Census Bureau.

Brower calls the current affordability situation “bad.” For example, in 2019, Americans with a $20,000 budget can afford about half of the used cars sold in the US. Currently, only about 10% of used cars cost less than $20,000.

The total cost of ownership over the life of the car is also increasing. Valdez Streety said car insurance costs have risen by around 20% over the past year. Since 2020, vehicle maintenance and repair costs have increased by more than 30%.

Furthermore, higher interest rates increase the cost of raising cars. According to statistics published by Experian Information Solutions, in the fourth quarter of 2024, the average interest rate for new car loans was around 6.3%, while the average interest rate for new cars was around 11.6%.

Brower said Americans are taking away loans that last eight years instead of receiving loans that will last within five years.

“Paying for cars between $700 and $1,000 is much more common than before. “It seems like a ridiculous amount of money to spend every month to fund a car. But that’s what happened to be affordable.”