Tariffs have "a profound effect" on new car prices — but may boost value of your used car

On April 2, a month-long reprieve that U.S. automakers were given from a 25% tariff on Canadian and Mexican imports is set to expire. 

That means car prices are expected to rise dramatically, given that they’ll also be impacted by President Trump’s 25% tariff on steel and aluminum, which went into effect last week. 

The steel and aluminum tariffs alone are “going to have a profound effect on the prices of vehicles,” Joe Giranda, director of sales and marketing for CFR Classic, told Salon. Combined with the tariff on Mexico and Canada — countries that provide supplies for U.S. automakers — he said he expects prices to rise by as much as $4,000 to $10,000 per vehicle. 

So, what does this uplifting economic news mean for you? That depends. 

If you were already planning on buying a car, experts agree: Buy it before Trump’s tariffs take effect. 

“If buying a new car was in your plans for the first half of the year, and you've been saving for a down payment and have worked the car into your budget, then you should do some car shopping,” Melanie Musson, an auto industry expert with AutoInsurance.org, told Salon.

Used car prices tend to increase alongside new car prices, Musson said. Experts also encourage consumers to make mechanical repairs to their cars before the tariffs take effect, too, since tariffs will likely raise the price of auto parts.

Shoppers who already have a vehicle they can sell or trade in may find themselves in a better situation, Musson said. “If new cars are more expensive, your used car will likely be worth more, which will help offset the cost of a new car,” she told Salon.

But for anybody who wasn’t planning on buying a new car, the advice from experts is clear: Don’t make financial decisions from a place of fear.  

“There's no need to put yourself in a position where you could be financially strapped just because you're afraid that car prices could increase,” Musson said. “No one knows for sure what will happen, and this is not a time to panic.”

Could you live without a car?

Nearly 92% of American households have at least one car, according to Forbes Advisor; a fifth of U.S. households have three. Much of this is because America is built for car ownership: Urban walkable areas account for just 1.2% of the nation’s land mass, and the average American now lives 27 miles away from their job — a figure that may be distorted by remote workers living further away from their workplaces than regular commuters.

For most American workers, it's not a practical option to live without a car if you can afford one. Unless you’re living in a handful of mostly expensive, East Coast cities with robust public transit, you’re often left to rely on an underfunded, unreliable and disparately connected patchwork of a transit system, one that might turn a 15-minute commute into one that takes an hour or more. “North America really is unique in the world in the lack of good public transit,” the author Jake Berman told The Guardian. 

So if you can afford to own a car, it makes sense that the attitudes around car ownership in the U.S. dictate that you should own a car (and, to please the ever-present Joneses, as nice a car as possible).

We don’t have an inherent need for cars, though, anymore than we have an inherent need for airplanes. Cars give us access to the thing we need: transportation to and from the places we frequent, as well as the places we want — or need — to get to quickly. Our vehicles, like all of our most expensive purchases, should enhance our lives, or at least add more to our lives than the financial stress removes. And while the benefits of car ownership are often enormous, the downsides — maintenance costs, filling and refilling the tank, the perpetual risk of emergency repairs — can be significant, and likely to intensify in the coming months. 

Depending on what type of city or town you’re in, the question “Could you live without a car?” might feel impossible under any circumstances (for most Americans, it’s probably the latter). But if it feels possible — if, say, you live in an urban area, have a regular routine that’d be bikeable, own multiple cars in your family or are simply considering a lifestyle shift away from certain polluters — it’s worth crunching the numbers on at least one alternative to permanent car ownership: day-to-day car rentals. 

The gig economy’s answer to Hertz and Enterprise is a slew of apps that allow individuals to rent out their cars in the way Airbnb allows folks to rent out their houses. The mobile app Turo is perhaps the most popular option (or at least the one I encounter the most). Day rates for most car rental companies tend to range from $50 to $100, while Turo charges around $49 per day to rent a car in Los Angeles. So, for the purposes of this exercise, let’s say it costs $80 per day to rent a car, adding a little cushion for gas and unforeseen costs.  

If you own a car, you’re paying for a few things: gas, monthly insurance and potentially a car payment. The average American driver spends around $200 a month on gas and around $220 for full-coverage car insurance. That’s $420 a month right there. New car owners with a monthly car note pay an average of $742, per month, while used cars owners have an average monthly payment of $525, according to Experian data. 

So, let’s average out that monthly car note to $600. Combined with gas and insurance, it costs American car owners around $1,000 a month for the gift of said ownership. And at $80 per day, a consumer could afford to rent a car for 12 days a month and still save $40.

Of course, that’s a crude analysis. And it also feels worth mentioning that my last car payment, for a 2019 Kia Optima, was around $425 a month — well below the figure we used here. Still, at the very least, perhaps this exercise is a nudge to consider what ideas might be calcified in your consumer psyche as hard and fast truths about our spending lives — what you need to have, how you need to live — that may not be serving you, your wallet or your overall well-being. 

I’ll also confess that I write this all as a car owner living in Brooklyn, New York, where it’s more of a headache to own a car than to go without (we traded in the Optima for an old SUV). We’ve lived here for around two years with this car, and I tell myself that when our two senior pups decide to “move to Santorini,” we’ll sell it.

But then I think about how frequently I use it to drive to estate sales and was able to haul home a vintage chair for pennies on the dollar, or pop into Manhattan to pick up a designer bookcase some rich, disassociated banker is selling for $20. Never mind the parking tickets I get each month, or the speeding tickets I can’t seem to escape as a driver raised on Houston’s infamous Interstate 45, or the fact that walks and subway rides leave me feeling far more connected to humanity than a trip in my cramped metal box.

Suffice it to say, some engrained consumer habits can fester for years if left unaddressed — long beyond the point that they’re serving you.