Today’s Car Market: Are Car Prices Going Up or Down?

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- What is the current auto tariff situation?
- How much will new car prices increase?
- Are tariffs affecting used car prices?
- Why are cars so expensive to begin with?
- New car prices climbed 22% since 2019
- What about auto financing rates and payments?
- Rising car ownership costs have slowed
- Is now a good time to buy a car?
- How to find the best deal on a car
What is the current auto tariff situation?
- In early April, President Donald Trump set a 25% tariff on all imported passenger cars and light trucks, although this tax has now been reduced to 10% for the UK (for the first 100,000 vehicles). The White House and Trump also announced agreements with the European Union, South Korea and Japan to reduce auto tariffs to 15%, but these changes haven’t happened yet
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- Foreign-made auto parts — including engines, transmissions, powertrain parts and electrical components — have a 25% tariff. Carmakers can apply for partial reimbursement of tariffs on imported parts, depending on the manufacturer’s volume and value of auto production in the United States
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- Vehicles imported under the United States-Mexico-Canada agreement are subject to a 25% tariff, but it applies only to the value of vehicle content not made in the U.S.
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- Some materials used in production that don't fall under the industry-specific 25% tariffs could be subject to reciprocal tariffs, which range from 15% to 41% depending on the country.
- A 50% tariff on imported steel, aluminum, copper and battery materials are adding to production costs of vehicles assembled in the U.S.
How much will new car prices increase?
Are tariffs affecting used car prices?
Why are cars so expensive to begin with?
- At the height of the Covid-19 pandemic, supply chain disruptions and semiconductor chip shortages were responsible for slowing, and even halting, vehicle production. As car inventory decreased, new and used car prices skyrocketed and remain elevated.
- High consumer demand following the pandemic enabled car manufacturers and dealers to continue selling cars at these higher prices.
- Ongoing inflation increased manufacturing and labor costs, which car manufacturers and dealers have passed on to car buyers.
- Many new cars come with advanced technology, larger infotainment screens, driver-assistance systems, and hybrid/EV powertrains — all adding to the cost.
New car prices climbed 22% since 2019
What about auto financing rates and payments?
Rising car ownership costs have slowed
Is now a good time to buy a car?
How to find the best deal on a car
- Shop around and be flexible about make and model. Some brands have already implemented tariff-related price increases, while others have not.
- Look at auto manufacturer websites for any special pricing promotions. Some automakers are offering specials to motivate car shoppers, and some may offer EV specials to move cars before the federal incentive ends.
- Check online pricing guides, such as Kelley Blue Book, Edmunds or NADA guides, to know what price you should pay.
- If financing, know the ins and outs of getting a car loan, so you can get more favorable terms.
- Compare auto lenders to find the best rate.
- Use an auto loan calculator to determine the best scenario — loan amount, interest rate, term and down payment — for a monthly payment that fits your budget.
Article sources
- 1. Cox Automotive. Kelley Blue Book Report: New-Vehicle Prices Trend Higher, as Higher Costs Hit Automakers, 2026 Model Year Product Arrives. Accessed Aug 12, 2025.
- 2. The White House. Adjusting Imports of Automobiles and Automobile Parts Into the United States. Accessed Aug 12, 2025.
- 3. Department of Commerce. The Department of Commerce Announces New Auto Tariff Offset Process.
- 4. The White House. Fact Sheet: President Donald J. Trump Adjusts Imports of Automobiles and Automobile Parts into the United States. Accessed Aug 12, 2025.
- 5. The White House. Addressing Certain Tariffs on Imported Articles. Accessed Aug 12, 2025.
- 6. Cox Automotive. The Trump Tariff Stance Has Shifted. Where Are We Now?.
- 7. Cars Commerce and Cars.com. Tariffs and Expiring Federal EV Tax Credits Fuel Affordability Challenges in Auto After H1 Sales Boom, According to Cars Commerce’s Industry Insights Report. Accessed Aug 12, 2025.
- 8. Edmunds. $30K for a Used Car? Here’s Why That’s Actually a Bargain in 2025. Accessed Aug 12, 2025.
- 9. Federal Reserve Bank of St. Louis. Consumer Price Index for All Urban Consumers: New Vehicles in U.S. City Average. Accessed Aug 12, 2025.
- 10. Bureau of Labor Statistics News Release. Consumer Price Index Summary. Accessed Aug 12, 2025.
- 11. J.D. Power Press Release. New-Vehicle Retail Sales Up 4.1% for July and Consumer Spending Sets Record for Month with $49.8 Billion Spent on New Vehicles. Accessed Aug 12, 2025.
- 12. Edmunds. $1,000 Car Payments Hit Record Highs. Accessed Aug 12, 2025.
- 13. IRS.gov. One Big Beautiful Bill Act: Tax deductions for working Americans and seniors. Accessed Aug 15, 2025.
- 14. Cox Automotive. Auto Market Report: August 5. Accessed Aug 12, 2025.