Is now the time to buy a new car in NC? What to expect as Trump’s tariffs go into effect
Editor’s note: This story was originally published on Tuesday, March 4. Some information may now be outdated.
Wednesday, March 5 update: Trump granted an exemption on auto tariffs on Mexico and Canada for one month, following a conversation with the “big 3” auto makers (Stellantis, Ford and General Motors), AP reported.
If you’re in the market for a new car, tariffs implemented by President Donald Trump could mean you pay significantly more — if you wait too long.
All other tariffs — taxes applied by governments on imported goods, according to the International Trade Administration — on Canada and Mexico went into effect on March 4 at midnight, The News & Observer reported. A 10% tariff on Chinese goods has been in place since early February, with an additional 10% tariff going into effect Tuesday.
Canada and Mexico responded by implementing tariffs of their own, with Canada’s going into effect on Tuesday. Mexico is set to announce its tariffs on Sunday, March 9.
North Carolina is home to more than 470,000 manufacturing jobs, including auto manufacturing, and experts say tariffs will increase costs for car companies, which will lead to higher prices and more layoffs, according to a news release from Tariffs Cost Us, a website dedicated to providing the public with reliable information about global trade and tariffs.
If you’re thinking about buying a new (or used) car soon, here’s how the new tariffs could raise vehicle prices and when those prices will increase.
How much will car prices increase?
A recent study suggested that some car prices, particularly full-size trucks and SUVs, could go up by as much as $10,000, according to Kelley Blue Book.
Car prices will go up for around 90% of new cars made in North America, Matthew Metzgar, an economics professor at UNC Charlotte, told The Charlotte Observer.
With tariffs in place, the price of car parts will go up by more than 25%, which will affect the majority of vehicle prices since many, including ones built in the U.S., use parts from Canada and Mexico, Kelley Blue Book explained.
“Cars’ ... technology and the computer element has become bigger and bigger that even importing some of those pieces from, say, China, where there’s a 20% tariff, are going to increase those costs as well,” Metzgar said. “China supplies tons of electronic equipment for various things, including cars. So all the electronic pieces are going to be increased in cost as well.”
Tariffs will also affect the price of new cars, similar to how the prices of new and used cars were nearly identical during the COVID-19 pandemic, Metzgar said.
“Let’s say you roll forward nine months and the new 2026 models are coming out, and they’re all $5,000 to $10,000 more expensive. Well, then a lot of people just go into the used car market, and so you’ll more demand for that, and certainly the same supply. Because, we’re not going to increase the supply used cars, and so that price will go up,” Metzgar said.
“Remember, during COVID, we saw used car prices almost reached the same level as new because used cars were in such short supply, and people wanted them, and they kept buying them, and pushing that up until it was almost nearly the cost of buying new. So something like that could very well happen again.”
When will car prices increase?
The price increase won’t happen overnight, Metzgar said.
“It’s going to take a little while to trickle through there to get to the consumer,” Metzgar said.
Car dealers typically keep a 75-day supply of cars at all times, meaning the cars currently on dealer lots will be unaffected, according to Kelley Blue Book.
However, once that supply runs out, newer cars imported will come with higher price tags.
“Shoppers are likely to see tariff-impacted prices first at Lexus and Toyota, each with close to a 40-day supply at the moment,” Kelley Blue Book says. “Other brands, including Ford, Lincoln, Buick, Jeep, Ram, and Mercedes-Benz, have over 100-day supply in stock.”
Will car insurance prices go up?
Yes. Since a big chunk of car parts are imported from Canada and Mexico, the price to repair cars will increase, which will lead to a spike in insurance rates, Metzgar said.
A recent analysis from insurance pricing service Insurify found that insurance rates could climb by 8% by the end of 2025, bringing the national average annual cost of car insurance from $2,313 to $2,502.
“If your vehicle is worth more, then the cost to repair it is going to be higher,” said Metzgar. “If these car parts are coming in from other countries, they’re going to be hit with that tariff as well.”
This story was originally published March 4, 2025 at 4:47 PM with the headline "Is now the time to buy a new car in NC? What to expect as Trump’s tariffs go into effect."
