FOX Business has reported that rental car companies might benefit financially from auto industry tariffs introduced by the administration of President Donald Trump. The tariffs are anticipated to impact the auto sector with price increases for vehicles becoming a prominent concern for consumers.
According to Brian Moody, Autotrader’s executive editor, the tariffs will affect both domestic and international markets, presenting more complexities than may be immediately apparent. While there is a common misconception that U.S.-manufactured cars will not see price increases compared to foreign ones, Moody argues that a uniform increase is not feasible from a competitive standpoint.
President Trump plans to implement a 25% tariff on all imported passenger vehicles, including sedans, SUVs, crossovers, minivans, cargo vans, and light trucks. Additionally, crucial auto parts such as engines, transmissions, and electrical components will face similar tariffs, with potential extensions to other parts if necessary.
The expectation is that higher-end models will experience larger price increases. Moody suggests that vehicles priced between $20,000 to $25,000 will not support steep price hikes, unlike models around $90,000. Edison Yu, a Deutsche Bank analyst, estimates a general price increase of 5% to 10% on cars, contingent upon exemptions under the United States-Mexico-Canada Agreement.
The administration has announced that automakers under the agreement, who can verify the portion of their vehicles constructed in the U.S., will receive exemptions, with the 25% levy only applicable to foreign-made parts. Despite this, Yu believes the majority of the increase may impact consumers, suggesting a near-term strain, particularly for manufacturers like Hyundai.
Jessica Caldwell, Edmunds’ head of insights, noted that with tariffs set at 25%, it is reasonable to expect an increase in vehicle prices, which could worsen affordability concerns in the industry. Edmunds’ data indicates the average transaction price for new vehicles is $47,373, with used vehicles averaging $25,005.
The intent behind these tariffs, according to the administration, is to protect and bolster the U.S. automotive sector from foreign industries benefiting from unfair subsidies. In 2024, imports constituted 50% of the 16 million cars purchased by Americans, a figure the administration aims to reduce through structural changes to the industry.
As uncertainty prevails, there has been an increase in consumer purchases from car dealers. For example, Tom Maoli, owner of New Jersey’s Celebrity Motor Cars, reported a 15% increase in sales. Deutsche Bank analysts anticipate strong sales in April and May, followed by a decline in the latter half of the year as higher production costs take effect.