Auto Tariffs and Your Dealership: Will Trump Tariffs Affect Car Prices?

If you work in the auto industry, it may feel like tariff news changes by the minute. Many are asking, will Trump tariffs affect car prices? We’re already seeing changes to supply chains, manufacturing, and inventory brought on by auto tariffs.

If you think now is the time for business as usual—think again! Savvy dealers need to have resources, strategies, and talking points to guide their buyers through this uncertain economic time.

In this blog, we'll walk through a detailed background on auto tariffs, how those tariffs may impact dealerships, customer perceptions, strategies for selling in difficult economic times, and of course, how video messaging can help tariff-proof your sales.

Overview of Trump tariffs

Tariffs are a tax on imported goods from outside the country. Governments may use tariffs to encourage more domestic projection and jobs. They may also lead to increased prices for consumers or retaliatory measures.

Since President Donald Trump took office, he made it clear that tariffs will be a key part of his economic strategy. On January 20, Trump signed an executive order requiring certain cabinet secretaries to research trade practices and make tariff recommendations by April 1.

Since then, the Trump administration has levied, retracted, and threatened several tariffs, and many will affect car prices and the auto industry, for better or worse.

Auto tariffs by the numbers

As reported by Today in late May, there is a 10% “baseline” tariff on all foreign countries with the threat of a “reciprocal higher tariff” on 60 countries after a negotiation period. There is also a 25% tariff on imported vehicles and a 25% tariff on aluminum and steel. Trump’s May 3 executive order also placed an additional 25% tariff on auto parts.

As of late April, Trump’s administration softened auto tariffs by cutting duties on some foreign parts (though not on those from China) and offering credits to auto makers assembling vehicles domestically.

Why will Trump tariffs affect car prices?

Trump’s auto tariffs on imported vehicles and automotive parts, particularly from countries like China, Mexico, and Europe, may lead increased costs throughout supply chains. For dealerships, that means:

• Some higher new vehicle prices: Automakers that use foreign-created parts or assemble vehicles in other countries may be subject to auto tariffs. Some OEMs will absorb costs while others will choose to pass them onto the consumer. Tariffs may raise costs an additional $2,500 to $5,000 for the lowest-tariffed American cars, and up to $20,000 for some imported models, according to research from Anderson Economic Group.

• Emphasis on American-made vehicles: Some OEMs have committed to increasing their U.S.-made output in response to auto tariffs, including Nissan and Hyundai. Though it takes time and effort to move supply chains, manufacturing changes can impact inventory and pricing for dealerships.

• Used vehicle shortages: With auto tariffs raising the price of new vehicles, people who may have originally bought new may choose to save money by turning to used options. However, inventory of used vehicles is low, and those prices may rise as well.

• Parts shortages and delays: Auto tariffs on key components can slow down production of vehicles as well as parts needed for repairs.

• Nervous customers: Buyers may hold onto their cars for longer, delay repairs, or choose less expensive cars in response to auto tariffs.

• Tighter margins: Independent dealers, who already work with thinner profit margins than major franchises, are especially feeling the pinch.

In a market already affected by rising interest rates, inflation, and supply chain disruptions, auto tariffs add yet another layer of complexity. For customers, this translates into sticker shock, financing challenges, and longer wait times—all factors that can stall the car-buying journey.

2025 car sales so far

The Cox Automotive Dealer Sentiment Index (CADSI) shows significant momentum in the industry amid auto tariffs. The survey suggested franchised dealers selling new and used vehicles are more optimistic about the market than independent dealers who only sell used vehicles.

Customer traffic surged in Q1, with franchised dealers reporting a 10-point jump in in-person visits. The profitability index also climbed, while inventory tightened for both new and used vehicles. 51% of all dealers surveyed cited the U.S. economy as the top factor holding back business, moving above interest rates (42%). While sales have been up in response to auto tariffs while buyers try to snag an excellent deal, dealers expect weaker conditions for summer 2025.

Top-selling vehicles of 2025

Buyers are asking, “Will Trump tariffs affect car prices?” While they show concern about affordability, large trucks and SUVs still dominate the market.

These were the top-selling vehicles for the first quarter of 2024, according to Car and Driver:

• Ford F-series pickup trucks

• Chevrolet Silverado

• Toyota RAV4

• Honda CR-V

• Ram Pickup

This data shows that, so far, people have not pivoted to buying smaller, less expensive cars just yet.

Do auto tariffs impact used cars?

In short, Trump’s tariffs cannot raise prices on used cars in the U.S. or new cars that are already on dealership lots for sale. However, used car prices are up and may continue to rise.

According to Kelley Blue Book, the average used car buyer paid $25,547 in April 2025, up $367 from March. This is a large increase for a single month. Used car prices tend to increase as new car prices do, and the used market may become more competitive due to auto tariffs as people struggle to afford new vehicles.

Low inventory levels also continue to impact used vehicles. Pandemic disruptions limited the creation of new vehicles a few years ago, meaning there are fewer used vehicles hitting the market now.

If they haven’t already, dealers should plan to source more used vehicles via auction or trade-in. A great way to reengage customers at the end of their lease is to send a video that starts the conversation.

How customers believe Trump tariffs will affect car prices

Auto tariff news impacts consumer perceptions and buying behavior. Car Dealership Guy created a CDG Consumer Snapshot Survey early in May to track consumer sentiment and behavior following the announcement of auto tariffs. Here are the three major findings:

1. Consumers are less interested in buying a car due to auto tariff concerns

42.1% of consumers say they’re somewhat or much less likely to buy a car, while 38.8% say their plans have not changed. J.D. power reported that new vehicle sales are forecasted to rise 10.5% YoY while consumers hurry to lock in low pricing.

But sales pace is slowing, and 19.2% of consumers say they’ll change to smaller or less expensive vehicles. 24.7% said they’re more likely to buy used. Buyers are trying to play it safe.

2. Consumers plan to hold onto their trade-ins for longer

We’re seeing dealerships try to encourage trade-ins to build up their used inventory, but 41.1% of consumers say they’re less likely to trade in a vehicle right now.

81.7% of buyers say they expect car prices to rise. Savvy shoppers are nervous about stretching their budgets in the future, so they’re holding onto cars they may have upgraded under different circumstances.

3. Consumer confidence is dropping fast

80.5% of survey respondents said they feel more cautious about the car market than they did earlier this year. Only 4.8% feel more optimistic.

These fears may change how consumers make car deals, and dealers are leaning into price transparency and shifting toward “least risk” language over pushing the “best deal.”

How large dealership groups are responding to auto tariffs

Automotive News recently released its top dealer groups for used-car sales across the country and asked some of the top players how they plan to navigate the used-car market.

Jeff Swickard, CEO of Swickard Auto Group of Las Vegas, said it’s hard to relay a plan to employees or lenders while “policy changes hourly.” However, most used car dealers say if tariffs raise new-vehicle prices, demand will shift toward used vehicles. In theory, this would bring wholesale prices up.

Here are some strategies used-car dealers are trying:

1. Focus on the short term.

Krause Auto COO Zack Krause said his dealership is focusing on the next two months of inventory, so they don’t hit zero days’ supply, but isn’t trying to predict sales for the full year or stock up too much.

2. Self-source more used vehicles.

Swickard Auto is trying to self-source used vehicles through trade-ins, lease purchases, or its service loan fleet, rather than using auctions or other outside sources. (Customers can use customary loaners while their car is being serviced, and those loaners turn into near-new used vehicles to sell.)

3. Encourage customers to move fast.

The affordability gap between new and used vehicles may begin to close due to tariffs. At that point, it would make more sense just to buy new. Jenni Newman, editor-in-chief for Cars.com, says if you’re thinking about buying a car—whether new or used—you should act soon.

How independent dealers can prepare

Independent dealers don’t have the deep resources of OEM-backed franchises, but they do have one major advantage: flexibility. With the right approach, smaller operations can adapt quickly to market conditions and turn challenges into opportunities. Here’s how:

1. Reevaluate your inventory strategy

Auto tariffs can make sourcing new vehicles or parts from overseas more expensive. Consider:

• Source locally: Focus on domestic brands and parts that aren’t subject to auto tariffs when possible. If you sell American-made vehicles, incorporate that message into your outreach and advertising

• Create a used-vehicle strategy: If new-car prices rise, buyers may shift to used vehicles. Since used vehicle inventory is already tight, you may have to lean more on trade-ins or lease purchases.

• Diversify vehicle types: SUVs and trucks remained the top sold vehicles in early 2025, but tariffs may push more buyers toward sedans and hybrids. Make sure you have a mix of available vehicles.

2. Review your vendor relationships

Lean on trusted vendors who can help you navigate sourcing issues, provide insight into pricing trends, and help you access in-demand vehicles and parts faster.

Now is not the time to cut back on selling tools and vendor partnerships. A competitive edge is more important in a difficult economy than a “normal” one. Make sure your CRM is tracking data, use vehicle presentation tools, and share videos to better engage your customers. Ensure your sales tools are working for you.

3. Sharpen your marketing and sales messaging

Now is the time to communicate value, transparency, and customer-first service. With price sensitivity on the rise, customers want to understand:

• Why they’re paying what they are

• What value they’re getting in return

• How your dealership is different from the competition

As a dealership professional, you have keen insight into how auto tariffs impact the market. Your buyers may be less experienced, and it’s your job to act as a trusted adviser.

Dealers (68%) are approximately three times more likely than car buyers (21%) to say that the car buying process is very or completely transparent, according to the CapitalOne Car Buying Outlook. Use video to put a face behind your word and create a friendly in-person buying experience.

How video can drive more sales in a tough market

At Covideo, we’ve seen firsthand how personalized video helps dealerships build trust, communicate clearly, and create a standout experience—even when times are tough. Here’s how:

1. Put a face to the name

Video humanizes your team. Sending a personalized video lets your customer see and hear you—instantly building rapport and credibility. For digital-first buyers, this is the best way to get facetime before they visit.

2. Explain price and value with confidence

Use video to walk through a vehicle's features, condition, and price. If auto tariffs have increased the price, explain why. When you address concerns proactively and transparently, customers feel respected and informed.

3. Show, don’t just tell

Whether you’re showcasing a vehicle, highlighting its condition, or explaining financing options, video enables you to provide a dynamic, engaging experience. Customers can see the details, hear your tone, and feel confident they’re getting all the details they need.

4. Keep the conversation going

From the first inquiry to post-sale follow-up, video makes it easy to stay in touch. Thank-you messages, service reminders, and personalized updates turn one-time buyers into loyal customers. This is also a great way to reach out for trade-ins while used inventory is tight and suggest an upgrade to past buyers.

5. Prioritize maintenance and service

Video isn’t just for sales professionals! When Trump tariffs affect car prices, people may hold onto cars for longer and need more repairs. Video builds transparency and trust in the service department, and buyers can approve work in a single click with Covideo!

6. Stand out from the competition

In a crowded market, dealers who use video are cutting through the noise. It’s a differentiator that customers remember—and it sets the tone for a more transparent, human-centered buying experience.

Tariff-proof your dealership sales with video messaging

Dealers can’t control the economy, but they can respond to it. Auto tariffs, affordability challenges, and interest rates will remain a challenge, but having the right sales tools can help you keep up the pace and sell more cars.

Now is the time to add video to your sales strategy! Easily record and send impactful introductions, vehicle walkarounds, thank you videos, and more with Covideo—video messaging made specifically for dealerships. See a demo today!