If you plan on buying a new car, you might want to do it soon.
Otherwise, President Donald Trump’s proposed tariffs could cost you.
A study being cited by several well-respected automotive media outlets, like Kelley Blue Book, suggests that new-car prices could jump by up to $3,000 and that top-end pickup trucks could cost more than $10,000 more if Trump enacts tariffs of 25 percent against Canada and Mexico by Feb. 1.
It’s unclear if he’s actually going to do this, but he’s hinting he wants to.
To be clear, the study being cited is just one piece of research — other studies could come up with different numbers. And again, it’s uncertain if Trump will follow through.
But what is known is that lots of cars, including big sellers like the Toyota RAV4 and Honda CR-V, are built in Canada. Lots of vehicles are also built in Mexico. On top of that, plenty of parts and components move cross-border as part of vehicle production.
Almost all economists will tell you that consumers, not producers, end up paying higher prices because of tariffs. Companies will simply pass the cost on to consumers.
Oh, and as Ward’s Auto points out, tariffs on imported Canadian oil would raise energy prices. Meaning higher prices at the gas pump.
Expect the automotive industry to fight this — Ward’s reports that GM boss Mary Barra and Ford head man Jim Farley have been talking to Trump about the issue.
It’s also possible, at least at first, that automakers could absorb the increased costs. But don’t expect that to last, if it happens in the first place.
New cars are already becoming expensive — the average transaction price was hovering just under $50K in the fall. If Trump gets his way, the price may continue to creep upwards.
[Image: Anna Moneymaker / Shutterstock.com]
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