The impending 25% tariffs on imported vehicles and auto parts, set to take effect on April 3, 2025, are expected to have far-reaching consequences for the automotive industry and consumers alike12. Industry analysts predict price increases ranging from $5,000 to $15,000 per vehicle, depending on the brand and model3. These tariffs will affect not only foreign-made cars but also domestically assembled vehicles that rely on imported components4. The impact extends beyond new vehicles, as used car values are also projected to rise, although the timing of these increases remains uncertain4. This sweeping policy change threatens to reverse recent momentum in auto sales and significantly alter the landscape of vehicle affordability in the United States14.

The impending auto tariffs have triggered a significant surge in car sales across the United States. In March, auto sales experienced a remarkable increase of 11.2%, reaching a seasonally adjusted annual rate of 17.8 million units1. This surge was largely attributed to consumers rushing to purchase vehicles before the implementation of President Trump's 25% tariff on imported cars1.

Leading manufacturers reported impressive growth, with General Motors experiencing a 17% increase in sales, driven by strong interest in budget-friendly crossover SUVs like the Chevrolet Trax2. The rush to beat the tariffs has led to a notable uptick in dealership foot traffic, with some buyers accelerating their purchase timelines by several months2. However, industry experts warn that this sales boom may be short-lived, with a sharp decline expected following the imposition of tariffs1.

The impending 25% tariffs are expected to have significant ripple effects across both new and used vehicle markets. For new cars, prices are projected to increase by thousands of dollars, with estimates ranging from $5,000 to $15,000 per vehicle, depending on the brand and model1. This substantial price hike is likely to push many consumers towards the used car market, driving up demand and prices for pre-owned vehicles as well2.

Industry analysts anticipate that the used car market will experience a delayed but notable impact. As new car prices rise, the value of used cars is expected to increase, though the timing and extent of this increase remain uncertain3. This shift could potentially benefit current car owners, as their vehicles may appreciate in value. However, it also presents challenges for budget-conscious buyers who may find both new and used vehicles becoming increasingly unaffordable4.

Experts advise consumers in the market for a new vehicle to consider accelerating their purchase plans before the tariffs take effect12. However, they caution against panic-buying and emphasize the importance of thorough research and financial consideration2. Key recommendations include:

• Comparison shopping to find the best deals

• Researching borrower-friendly loans

• Ensuring the purchase aligns with personal financial situations and vehicle needs

• Being prepared for potential price increases ranging from $1,000 to $8,000 CAD, depending on how the tariffs play out and Canada's response3

While some buyers are motivated by fears of future unaffordability, others remain skeptical about how quickly these price hikes will materialize, given that dealerships still have inventory unaffected by tariffs4.