Auto Tariffs: How They May Affect Your Next Car Purchase

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - August 10, 2018

If you’ve been following recent news from the automotive sector, you may have heard about auto tariffs and how they could impact car sales.

How Will Tariffs Affects Car Prices?

What exactly is an auto tariff? A tariff – auto or not – is basically a border tax charged on imported goods. Any item or good from another country that can be sold in the US could be subject to some type of tariff.

Now that you know what a tariff is, why should you care about auto tariffs? It’s because with the proposed tariffs on imported cars and auto parts, US vehicle buyers could see an increase in new car prices ranging from $1,400 to $7,000 per vehicle – and this includes domestic vehicles.

You may not think these tariffs apply to domestic manufacturers such as Ford, General Motors, or Fiat Chrysler Automobiles, but all “American" vehicles contain some percentage of foreign-made parts. One example is the Chevrolet Cruze, which, according to the US government, has about 51 percent of foreign parts content. According to the Peterson Institute for International Economics, if all the tariffs take effect, it could mean the Cruze’s base price of $16,381 could jump by $2,140. Even if just 66 percent of tariffs pass, you can still expect an increase in price.

In the same study by Peterson, compact cars, compact SUVs and crossovers, and luxury compact SUVs and crossovers are expected to take the biggest hits with the tariff. So, if you’ve been sitting on the idea of buying a newer car, now may be the time to do so.

US Trade vs. Other Countries

Based on data for 2016 from the World Integrated Trade Solution (WITS), here’s how the United States' transportation trade stacked up against other major countries that distribute and/or make cars and parts:

Country United States United Kingdom Germany France Canada Japan Republic of Korea Mexico
Total Import Value $201.8M $63M $273M $101.7M $74M $150.8M $63M $96M
Total Export Value $330.2M $95.9M $134M $87.9M $70.8M $23.8M $19M $42M

As you can see, importing and exporting various car parts is important. Tariffs work both ways: there’s a tax on exporting and importing certain items. These countries work together to produce the best vehicles out there, however, with higher auto tariffs comes higher prices on vehicles and car parts.

The Bottom Line

The proposed auto tariffs will directly affect new car prices. If the tariffs go through and you want to purchase a new – or even newer – vehicle down the road, you may find yourself in a financial bind due to the increased prices.

If you’re looking to buy a car, new or used, but worry your bad credit is holding you back, let CarsDirect help. We work with special finance dealers all across the country and we want to help you find a dealership in your area. The process is free of charge and there’s never any obligation to buy. Get started by filling out our auto loan request form today!

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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