• by Tanya Gazdik , March 27, 2025

President Trump signed an executive order Wednesday imposing a 25% tariff on all vehicles that are imported into the United States starting April 2. 

The tariff applies to all light vehicles, as well as some automobile parts, including engines, transmissions, powertrain parts and electrical components, according to a White House fact sheet.

“Experts say Trump’s ‘shotgun approach’ to auto tariffs will raise prices for everything from used cars to insurance premiums and repair costs: ‘Virtually nothing goes unscathed,’” according to Fortune. “You may want to buy that car you've been eyeing ‘in the next couple of days, even this weekend,’ one expert said.”

Vehicle prices are expected to rise, according to Jessica Caldwell, Edmunds’ head of insights.

“Automakers will likely face increased costs throughout the supply chain, and those costs could be passed along to consumers unless manufacturers find innovative ways to absorb or offset them, including the possibility of dipping into their profit margins,” Caldwell said in a statement. “However, with the tariff set at a notable 25%, it’s reasonable to expect that vehicle prices will rise, which presents an added challenge to an industry that is already grappling with ongoing affordability concerns.”

Incentives and discounts will likely dry up, she notes. 

“Incentives have only recently returned in a meaningful way as inventory has rebounded, and they have contributed to more consistent vehicle sales over the past year,” Caldwell says. “With added cost pressures, automakers may pull back on incentives, which could make it more difficult for some consumers to find affordable options.”

Edmunds vehicle pricing data from February 2025 reveals the average transaction price for new vehicles was $47,373 and the average MSRP for new vehicles was $49,350, making the average discount for new vehicles $1,977. 

Some auto dealers are already advertising a pre-tariff sale before prices go up. 

“Suburban Subaru in Vernon, Connecticut, is offering ‘pre-tariff savings’ on its entire inventory of new models,” according to The Drive. “For example, there’s a 2025 Impreza Sport with an MSRP of $29,385; that figure drops to $28,388 once the buyer claims $997 in ‘pre-tariff savings.’ What that number corresponds to isn’t clear. It doesn’t account for the full tariff, because 25% of $29,385 represents precisely $7,214.”

The Detroit Three automakers are not excluded from the tariffs. 

“Cox Automotive executive analyst Erin Keating said vehicles impacted specifically from Canada and Mexico will be a lot of the U.S. auto market’s most affordable vehicles —  the Ford Maverick, the Toyota RAV4, VW Jetta, Audi Q5 and several Mazda models,” according to the Detroit Free Press. “Additionally, vehicles like the Chevrolet Trax will also be impacted coming in from Korea.”