MW New-car prices could climb $15,000 under Trump's tariffs - and 'no one' wins, Wall Street analyst says

Andrew Keshner

'If you know you need a new car soon anyways, there's a pretty good argument for acting as fast as you can,' says one car-buying expert

Buckle up, car buyers.

President Donald Trump's array of tariffs will increase new-car prices anywhere from $5,000 to $15,000, according to Wedbush analyst Dan Ives.

At a time when new cars cost nearly $50,000 on average and auto-loan interest rates are high, Ives's Wednesday estimate could mean already expensive automobiles will be further out of reach for many working Americans.

Trump on Wednesday afternoon detailed the particulars of his new tariff plan. It's a flat rate of 10% as a minimum, plus an extra reciprocal rate per country that's half of the nation's tariffs towards the U.S. This is on top of several new tariffs the administration has already put into effect. Tariffs of 25% on auto imports are scheduled to take effect Thursday.

Ahead of Trump's Rose Garden announcement, Ives anticipated price hikes on new cars of $5,000 to $10,000 "out of the gates."

The average transaction price on a new car was $48,039 in February, according to Cox Automotive. Adding $5,000 more to that price would be a 10% increase, while adding $15,000 would be a 31% mark-up.

See also: Tariffs could increase car-insurance prices. Here are 3 moves to cut costs - and one to pump the brakes on.

To be clear, the extent and timing of tariff-related price increases on cars remains to be seen. But Ives is one of several observers predicting a tough road ahead for car buyers.

Steve Man, senior industry analyst at Bloomberg Intelligence, says he believes new cars will see an approximately $3,500 to $10,000 markup due to tariffs, depending on the make and model. If the 25% tariffs are fully passed through to buyers, they'll pay roughly $6,000 to $16,000 extra for new cars, according to iSeeCars.

The direct impact of tariffs on the base prices of cars is just one hurdle for buyers. They also face potential difficulties getting auto loans amid higher borrowing costs. Car-insurance costs will also climb as carriers price higher replacement costs into their premiums, according to experts.

The White House has dubbed Wednesday "liberation day" and views Trump's tariffs as a way to encourage more domestic production and more jobs.

Trump recently said in an NBC News interview that he "couldn't care less" if foreign carmakers raised prices. "I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty," he said.

But Ives is skeptical. "We stress that the concept of a U.S. carmaker with parts all from the U.S. is a fictional tale that does not exist and would take years to make this concept a reality," he wrote. It would take three years and billions of dollars to bring approximately 10% of the auto supply chain onto American soil, Ives added.

"The winner in our view from this tariff is no one," he said.

Some automakers are already speeding to the price hike, he noted, pointing to Ferrari $(RACE)$. Last month, the Italian luxury sports-car maker announced increases of up to 10% on models imported from Wednesday going forward.

How tariffs could affect used-car prices

The average listing price on a used car with more than 70,000 miles was just over $25,000 as of February, according to Cox Automotive.

In all likelihood, tariffs on new cars and parts will drive up used-car prices as priced-out new-car buyers look to the used market instead, according to Sean Tucker, lead editor at Kelley Blue Book.

The timing and extent of a used-car price hike isn't yet clear, Tucker said. The pandemic's chip shortage slashed new-car production and sent used-car prices soaring. Though used-car prices have since retreated, the pandemic-era shortage of new cars means fewer now-used cars coming onto dealer lots.

Tucker doesn't want anyone rushing into a multi-thousand-dollar decision to buy a car. However, he added, "if you know you need a new car soon anyways, there's a pretty good argument for acting as fast as you can."

Related: Should you buy a car now to avoid tariffs? That strategy has one big potential roadblock.

Read more: People could barely afford their cars even before Trump's auto tariffs. It's about to get worse.

Victor Reklaitis contributed to this report.

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-Andrew Keshner

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