Imagine walking into a dealership to buy a new car and discovering that your preferred vehicle suddenly costs up to $5,000 more than it did not long ago. This situation could happen if President Donald Trump succeeds in raising tariffs on imports. If he does and other countries respond to it, we’re looking at a potential 25 percent tariff which will result in increased vehicle prices regardless of the automaker.
The average new vehicle sold in the US with various discounts factored in costs about $32,000. The 25 percent tariff will be passed down to the consumer resulting in a price increase of $4,000 to $5,000 per vehicle. And that estimate takes in account carmakers absorbing half the cost. Besides, if automakers absorb that same amount per vehicle they’ll have to make cuts in production and labor.