Los Angeles — As the clock ticks down to April 2, 2025, the automotive industry is bracing for a significant shake-up with a looming 25% tariff on goods imported from Canada and Mexico. This anticipated tariff is part of President Trump’s ongoing trade policies, sending shockwaves through the car buying and owning experience. As uncertainty reigns, consumers are left emerging from a state of confusion about what this means for their wallets.
At a Nissan dealership in Los Angeles, general manager Brandon Wishengrad, who has been selling cars for over 20 years, feels the pressure. "It's tough to say," Wishengrad reflects. "At the moment, I think we know just as much as anybody else does." He admits that the unpredictability of these tariffs has made it difficult to advise customers on whether they should buy now or wait.
According to estimates from the Anderson Economic Group, the average cost of a new car could see an increase of between $3,500 and $10,000 if the tariffs proceed as scheduled. This potential price jump has everyone from dealerships to consumers on edge. Jessica Caldwell, head of insights at Edmunds, describes the situation as a "spreadsheet nightmare," warning that many vehicles require parts that come from various countries.
In fact, Caldwell emphasizes, "A lot of the vehicles are final-assembled in the United States, but get engines and transmissions from Mexico and Canada." She strongly recommends those looking to purchase a new vehicle in the coming months consider doing so sooner rather than later. "We don't know if the tariffs will go through ultimately, but if you can't afford to take that gamble, I think it's probably best to err on the side of caution,” she advised.
The impact of tariffs is not limited to new car prices; it spills over into repair costs for car owners. As auto parts are often imported, higher tariffs mean higher costs for repairs. Caldwell and her industry colleagues have noted that everything from brake pads to engines typically comes from overseas. As these costs rise, so too do repair bills for the everyday consumer.
"If a fender that used to cost $200 now costs $300 because of tariffs, the additional costs eventually reach you," notes an insider. Both parts supply and labor costs are expected to surge, with mechanics adjusting their rates to accommodate the inflated prices of replacement parts.
Consumers might hope to avoid these higher prices by shopping for used cars; however, the equation isn't that easy. Mark Schirmer, a Director at Cox Automotive, points out that the two markets are intrinsically linked. As the price of new vehicles climbs, used car prices will inevitably follow. “The two are joined at the hip,” Schirmer explains. Higher demand for used cars due to higher new car prices leads to fewer supplies and, therefore, increased prices.
As consumers contend with heightened costs for both new and used vehicles, they’ll also find the burden of car insurance premiums increasing. According to data from Insurify, average car insurance payouts are projected to jump nearly $200 this year, with rates climbing from an already steep 5% increase in 2025 to an expected 8% increase by year’s end.
Insurance costs for Tesla owners are expected to rise even more steeply, with full-coverage insurance for the Tesla Model 3 increasing as much as 30% last year. These costs, along with rising premiums for all types of vehicles, are directly linked to the higher costs of parts, which insurers factor into premium calculations.
The simple notion is this: high tariffs trigger inflation, which has a domino effect cascading through the automotive supply chain. It’s estimated that replacing common parts like brake pads or windshields will cost consumers substantially more than in previous years, with estimates predicting two year-on-year price increases.
The practical impact on consumers' budgets can be staggering. Replacing a basic bumper has shifted from an estimated $800 to $1,000 post-tariff, and routine repairs can end up costing several hundred dollars more. When added together, the increased expenditures could equate to another $3,000 or more annually for an average car owner.
So, what can consumers do to insulate themselves from these impending financial burdens? Proactive measures can make a significant difference. It's wise to compare repair costs across various automotive shops, as differences in sourcing strategies can yield cost savings. Moreover, looking into alternative parts—such as refurbished or aftermarket options—might provide a way to mitigate some of the sting.
Shopping around for insurance can also provide breathing room in tight budgets, especially considering rising costs. As for car rentals, consumers should prepare for those rates to spike as well, with per-day rental costs projected to jump significantly due to increased acquisition costs and repair expenses.
Ultimately, the impending tariffs set to take effect will shape not only new vehicle purchase decisions but an entire spectrum of automotive expenses. As consumers navigate this turbulent landscape, staying informed and adaptable will be vital to minimizing the impact on their personal finances.