US President Donald Trump has entertained the concept of “permanent” 25% tariffs on new cars and parts from other countries. POTUS believes the move will incentivize automakers to set up shop here in the United States. However, analysts and industry experts reckon it’ll hurt the American buyer and make everything automotive that much more expensive, from new cars to parts and maintenance. 

President Donald Trump is using tariffs as a weapon, and analysts say the American car buyer will pay for it

25% car-focused tariffs will make new cars more expensive and parts pricier. Analysts agree that there is no gray area in the matter. The tariffs roll out, and prices go up. Even buying and maintaining a vehicle with American final assembly will get more expensive. And it’s not just a small increase; average new car prices will rise by thousands across the board. Consequently, some foreign luxury cars may rise in price by $8,000 or more.

Adam Jonas, a Morgan Stanley auto analyst, says the price increases for car buyers will be significant, per USA Today. “A 25% tariff on all imports into the U.S. market would represent a significant (if not unprecedented) increase in the prices of cars, effectively inflating the average price of a vehicle by 11% or 12% (all else equal) and raising the average monthly auto loan payment from approximately $750/month to $830 or $840/month,” Jonas said. 

“In our view, the price increases will drive demand destruction, particularly as affordability has been a challenge for all buyers,” analysts at Bank of America said of the tariff-derived price hikes. In response, auto industry groups came together yesterday to pen a letter to the White House. Their goal? Urging restraint in the trade war.

“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships, and will make servicing and repairing vehicles both more expensive and less predictable,” the letter read.

Therein lies yet another issue. There isn’t really such a thing as a totally American car. Auto parts are getting price hikes as most North American-made cars feature a myriad of parts from China, Korea, India, and many other trade partners. Financial analysts say that the auto part tariff structure “raises the risk to the supply chain and potentially could result in production stoppages,” per CNN Business.

It’s already a problem we’re seeing with Tesla, the most “American-made” of automakers. Tesla CEO Elon Musk, despite his close relationship with Trump, has been a vocal dissenter of the auto industry tariffs. Still, despite his objections, Tesla has had to cancel shipments of Model S and Model X EVs to China. Make no mention of the rare earth metal restrictions causing delays for Musk’s Robotaxi, Semi, and Optimus humanoid robots.