DETROIT – With tariffs set to go into effect Wednesday, the cost of doing business in the auto industry is likely to change. However, it remains unclear who will ultimately foot the bill.
Part of that uncertainty is that manufacturing vehicles currently relies on a close partnership between the United States, Canada and Mexico. We know those tariffs are currently set at 25%, but we don’t know if certain parts will be exempt, which impacts car prices.
Read: U.S. automotive industry braces for tariffs -- What consumers need to know
If you’re in the market for a new vehicle, the decision to buy now or wait could hinge on timing. The short answer is that it’s complicated.
“If you were considering to buy a new vehicle, you may want to look at buying one now, as opposed to waiting a couple of months. You’re kind of rolling the dice,” said CNBC auto reporter Phil La Beau. “If these tariffs go into effect and they stick, there’s a decent chance that some of this higher cost will be passed along through the dealer to you, the buyer. Does that mean the price is going to go up $1,000 or $5,000 or $8,000? Nobody knows at this point.”
The auto industry is expected to face a 25% tariff starting April 2.
“If these tariffs stick, there will be higher costs for the automakers; that’s not debatable at all. They will face higher costs,” La Beau said. “So the question becomes, how do they offset that?”
It remains uncertain whether the tariffs will roll out as planned, be scaled back, or scrapped altogether. Additionally, it’s unclear which components within a vehicle could be exempt from these tariffs. Key components may be impacted, influencing whether costs are passed from automakers to dealers and ultimately to consumers.
“There’s no certainty here,” La Beau said. “I know that’s not what consumers want to hear, but at this point, it’s still unclear exactly what will happen with the pricing of new vehicles.”
Car companies typically plan in 5-year cycles, but the looming threat of the tariffs complicates these plans, creating even more uncertainty.
Related: President Trump’s tariffs gain unlikely ally in UAW leader
