Climbing car costs: auto tariffs set to begin later this week will increase vehicle values

FRESNO, Calif. (KFSN) -- Auto tariffs set to begin later this week will increase vehicle values. The President says tariffs will improve the U.S. economy, but some economists argue otherwise.

Lithia Hyundai is busy selling current cars on the lot as the month comes to a close, but the South Korean-based company will soon see its vehicle prices in the U.S. rise.

President Donald Trump signed an executive order on March 26 imposing 25% auto tariffs on imported vehicles and certain automobile parts starting April 3.

At Lithia Hyundai, the general manager said he's been paying attention to the President's messaging for months and made arrangements.

"I currently have 450 new vehicles on the ground, I have 300 incoming that are all protected," said Moose Pohyar, Lithia Hyundai General Manager. "Having these cars available and ahead of time are basically protecting the vehicle prices, locking them in so they're not affected by tariffs and increased prices."

The big questions are how soon will tariffs impact your wallet, and by how much?

UC Merced Associate Professor of Economics Greg Wright said it depends on a few factors. He believes if manufacturers see this as a negotiating tactic, they may hold off on raising prices.

If the goal is to bring manufacturing back to the U.S., Wright said we'll feel the effects sooner.

"It usually takes a few weeks in terms of the logistics in the customs agency to sort of start, actually imposing and collecting tariff revenues," said Wright. "But I think the car manufacturers are going to respond very quickly, and we will see prices rise almost immediately."

The Trump administration said its goal is more U.S. jobs.

"And the president will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades," said Karoline Leavitt, White House Press Secretary. "He's doing this in the best interests of the American worker."

But Wright believes shoppers will pay the price.

"We do have an instance in which we did have tariffs raised in the previous trump administration on Chinese products," said Wright. "What people have found actually is that the pass-through was nearly 100%. It's not clear that that's going to be the case this time. Maybe it'll be less than 100 percent."

He anticipates American auto producers will also raise their prices in competition.

Used car prices could climb as demand increases from people avoiding pricier new models.

The cost of auto insurance also climbs when you're covering more valuable vehicles.

To break that down, if you're looking at a $20,000 car, that's an additional $5,000 added on if the entire tariff cost is passed on to the consumer. For a $40,000 car, that's an additional 10,000.

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