Car Tariffs Are Still in Force. Here Is What Actually Changed.

The ruling that did not change car prices

In February, the Supreme Court struck down many of the administration's tariffs in a 6-3 decision, ruling that the law the White House cited does not empower the president to impose them.

New car tariffs survived, because they rest on different authority. The decision covered tariffs issued under the International Emergency Economic Powers Act of 1977, which includes the country-by-country reciprocal tariffs and duties on goods from Canada, Mexico and China. Automotive tariffs come from Section 232 of the Trade Expansion Act of 1962, which the court did not consider.

Cox Automotive's summary at the time was direct: the ruling affects only IEEPA-based tariffs, which are not the authority driving auto costs. The Section 232 duties, including those on steel, aluminum and imported vehicles, remain in force.

What is actually in place

• •A 25% tariff on cars built outside the United States, effective April 3, and on many parts used in cars built here, effective May 3
• •15% on cars built in Europe, South Korea and Japan under separate trade agreements

What it adds to a price

Kelley Blue Book estimates the tariffs could increase prices by as much as $6,000 on vehicles priced under $40,000. New car prices are up about 10% since last year, according to KBB's tracking.

The average transaction price in September was $45,915, up 0.7% year over year, per J.D. Power. That modest-looking increase is partly because automakers absorbed cost and leaned harder into discounts. Average incentive spending rose 7.3% to $3,574 per vehicle.

Tariffs raise the cost of building a car. Incentives decide how much of that cost you actually see on the sticker.

Why no car is fully exempt

No vehicle assembled in the United States is made entirely of domestic parts. Even Tesla sources components from other countries. Parts frequently cross borders several times before final assembly, which means a tariff on parts reaches almost every vehicle regardless of where it is bolted together.

That is also why tariffs feed into insurance and repair costs. Most parts used in collision repair are imported, and a 25% tax on them raises the cost of fixing a car, which feeds into premiums over time. It is the least discussed and most lasting effect of the whole policy.

The practical takeaways

Buying new. Ask for the out-the-door price rather than the sticker, and ask which line items changed this year. Market adjustments and dealer-installed accessories are the two most negotiable lines on any quote, and on a tariff-affected model they are worth more attention than usual.

Buying used. Tariffs do not apply directly to previously owned vehicles, which is part of why the used market has held up. The Manheim Used Vehicle Value Index stood at 206.2 in mid-September, down 1% from August, which is a modest softening rather than a collapse. Used supply is still tight because roughly 8 million fewer vehicles were built during the pandemic, and those are the cars that would be coming off lease right now.

Trading in. A tight used market is good news for your trade value. Get a written offer from more than one source before you sit down at the desk, because it is the one number in the deal you can verify independently of anything the dealership tells you.

Sources: Kelley Blue Book; Cox Automotive; Automotive News; Manheim.