Tariff Impact Reaches US Consumers As Car Prices Rise Sharply In April

US consumers paid noticeably more for new vehicles in April, reflecting the early effects of auto import tariffs, according to newly released data. Kelley Blue Book, a unit of Cox Automotive, reported that the average transaction price for new vehicles rose 2.5 per cent from March.

Historically, the typical increase during this period is about 1.1 per cent. Only once in the last ten years—April 2020, amid pandemic shutdowns—did prices rise more sharply, jumping 2.7 per cent.

The increase comes as automakers navigate a new landscape shaped by 25 per cent tariffs on vehicle imports from key trade partners, including Canada and Mexico, reported Reuters.

Despite these levies, manufacturers have mostly avoided raising sticker prices. Companies like Hyundai, Ford, and Stellantis have instead introduced incentives and discounts to keep buyers engaged.

Consumer Behavior and Dealership Dynamics

Even though official pricing has remained relatively flat, consumer expectations of rising costs due to tariffs have played a role in price inflation at the dealership level. “Those models got more demand, and therefore the local pricing dynamics at the dealership level likely helped those prices go higher,” said Erin Keating, executive analyst at Cox.

That heightened demand has prompted buyers to act quickly, anticipating that prices may only climb further. As a result, average spending by car shoppers has increased. For example, Ford has begun charging higher prices for some Mexico-manufactured models. As reported by Reuters, certain trims of the Mustang Mach-E, Maverick pickup, and Bronco Sport have seen prices increase by up to $2,000, according to a dealer notice.

While consumer incentives remain strong, Cox data shows that promotions as a percentage of transaction price have dipped to the lowest level since mid-2024. “Pricing is fairly stable at this point,” said Todd Szott, dealer partner at Szott Automotive Group, which operates Ford, Stellantis, and Toyota franchises in the Detroit metro area.

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Used Cars Climb and Supply Tightens

In addition to the surge in new car prices, wholesale prices for used vehicles also ticked upward. Cox’s Manheim Used Vehicle Value Index showed a 4.9 per cent increase year-over-year in April, and a 2.7 per cent rise from the previous month, reaching 208.2.

Inventory levels are emerging as a new concern. Fewer than 2.6 million vehicles remain on dealer lots nationwide, and the trend could continue downward. Cox Chief Economist Jonathan Smoke indicated during a webinar hosted by the Automotive Press Association that inventory may tighten further as strong sales persist and imports decline.

Some dealers are already experiencing strain in their supply chains. “I do have some concerns just in terms of the pipeline,” said Paul Zimmermann, partner-owner at Michigan-based Matick Automotive Group, which represents GM and Toyota. “It’s running healthy right now, but we need to make sure that there’s no blip.”

Looking Ahead: Long-Term Pricing Pressures

The full impact of tariffs could still be ahead, with Cox previously estimating that directly affected vehicles could become 10 per cent to 15 per cent more expensive. Even models not subject to the full tariff might see a 5 per cent bump. Keating noted that while drastic hikes aren’t expected immediately, the transition to new model years this summer could bring broader price adjustments.