President Donald Trump said Thursday that he may raise tariffs on imported vehicles, a move he believes could accelerate automakers’ investments in the United States.
“I might go up with that tariff in the not too distant future,” Trump said during a White House event. “The higher you go, the more likely it is they build a plant here.”
Automakers have been lobbying the White House to reduce the current 25% auto tariffs, which were put in place during Trump’s previous term. The Detroit Three automakers have criticized recent trade negotiations that reduced tariffs on British-made cars while leaving rates on vehicles from Canada and Mexico unchanged.
Trump pointed to a series of major investment announcements as evidence that tariffs are having an impact. This week, General Motors said it will invest $4 billion in three U.S. plants and move some SUV production from Mexico. He also highlighted Hyundai’s $21 billion investment unveiled in March, which includes building a U.S. steel plant.
“They wouldn’t have invested 10 cents if we didn’t have tariffs, including for manufacturing American steel, which is doing great,” Trump said.
Although Mexico announced in May that cars built there and shipped to the U.S. would face an average tariff of 15%—lower than the 25% rate—due to concessions on U.S.-made components, automakers remain under pressure from rising costs.
In recent weeks, Ford Motor and Subaru of America have both increased prices on certain models, attributing the hikes to costs linked to Trump’s tariffs. In May, Ford said the tariffs could reduce its adjusted earnings by about $1.5 billion.
GM estimated its current tariff exposure to be between $4 billion and $5 billion, with roughly $2 billion stemming from affordable vehicles it imports from South Korea, where entry-level Chevrolet and Buick models are manufactured.
Consumers shopping for a new car may want to act fast, as tariffs are expected to push prices higher in the coming months. For now, sticker prices remain close to pre-tariff levels, largely because many vehicles currently on dealer lots were built before the tariffs took effect.
“There’s a lot of uncertainty, but retail prices are holding pretty steady,” said Mark Schirmer, a spokesperson for Cox Automotive. In May, the average transaction price for a new vehicle was $48,799, virtually unchanged from April, according to Cox data.
“We’re not quite seeing the full impact of the tariffs yet,” said Joseph Yoon, consumer insights analyst at Edmunds. The company reported that monthly loan payments on both new and used cars ticked up slightly in May, but those changes were in line with typical monthly shifts.
As of June, the Trump administration has implemented a 25% tariff on imported vehicles and many foreign-made auto parts. While there are temporary exemptions for some components from USMCA countries announced in April, most imports still face the additional costs.
These new auto tariffs are layered on top of existing steel and aluminum duties—some as high as 50%—which have already raised manufacturing costs throughout the auto supply chain, even for cars built in the U.S.
“There are significant tariffs on the auto industry right now,” Schirmer said. “The reality is, tariffs are inflationary,” he added. With those extra costs, car prices will rise “unless something changes drastically in the near term.”
To avoid scaring off buyers, automakers have mostly held the line on sticker prices since April by trimming rebates and special financing offers, according to The Detroit News.
“We believe dealers and automakers are getting squeezed a little bit on pricing,” Schirmer said, noting that dealer profits were lower in the second quarter compared to earlier in the year. “So far, they’ve mostly held the line on retail pricing, but it’s not clear how long that can last,” he added.
Although there was a spike in tariff-driven purchases during March and April, sales slowed in May, Cox Automotive reported, suggesting that consumer confidence may be slipping amid economic uncertainty. That pullback has helped keep vehicle prices relatively flat—for now.
Another reason prices haven’t surged yet: many cars on dealer lots were built before the new tariffs. But that supply is starting to dwindle.
“That inventory is running out,” Schirmer warned. As newer, tariff-affected models arrive, prices are expected to climb.
Ford and Subaru have already raised prices on select models by up to $2,000. Analysts estimate that, depending on the vehicle, tariffs could add anywhere from $2,000 to over $15,000 to the price of a new car, according to projections from the Anderson Economic Group.
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