Tariffs could make used cars more attractive to consumers. (Credit: madscinbca/Adobe Stock)
Tariffs will raise prices on cars and parts, but those increases will vary widely.
In a recent CIECA webinar, Ryan Mandell, director of claims performance for Mitchell, said tariffs are estimated to raise new vehicle prices anywhere from $2,500 to $12,000 depending on vehicle make and model.
Tariff levels and the goods and countries impacted have been subject to change over the last several weeks, and they could change again over the coming months. In the current moment, automotive-related tariffs are as follows:
- Whole vehicle tariffs are at 25% and went into effect on April 3. The tariff applies to the wholesale value of the entire vehicle.
- Vehicles won’t be tariffed if they fall under the United States-Mexico-Canada Agreement (USMCA). A vehicle is USMCA-compliant if at least 75% of the vehicle’s components are produced in North America. The percentage of the vehicle that doesn’t come from North America, however, is still tariffed at the 25% rate.
- Auto parts tariffs of 25% are set to start by May 3. In the next 90 days, the U.S. Department of Commerce is supposed to establish additional tariffs for auto parts not already included in the May 3rd tariffs.
- Steel and aluminum imports are subject to 25% tariffs.
About 50% of auto parts imports into the United States are USMCA-compliant. Car makers including GM, Ford, Toyota, Nissan and Volkswagen manufacture dealer replacement parts in Canada and Mexico.
Other car makers will pay a steeper price. Hyundai, Kia and even some Chevy models are manufactured in Korea. Honda, Mazda, Toyota and Nissan manufacture many of their vehicles in Japan.
But there are exceptions: the Honda CR-V, for example, is assembled in the United States, with only 20% of the content coming from Japan, so that model would be USMCA-compliant and subject to lower tariffs.
Mandell used a 2025 Hyundai Elantra to show how tariffs might impact the cost of a vehicle manufactured abroad. With a base MSRP of $22,125, the Elantra would be subject to a 25% tariff on its wholesale value of about $18,806. Assuming the cost of that tariff is passed on to the consumer, the car’s MSRP would increase to $27,033.
The price increase could push more consumers to the used market going forward, Mandell said, which could also raise prices for those vehicles.
From an insurance perspective, an increase in vehicle prices could create more incentive for insurers to fix cars versus write them off as a total loss. Mandell projects a total loss reduction of 1% to 3% due to the tariffs.
The increases won’t be felt right away. “I think we will start to see the impacts closer to July or August,” Mandell said. “We’re still a few weeks from when the parts tariff goes into place, and there’s inventory on shore that will be worked through first.”
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