The Tariff Trap: How Import Taxes Could Shake Up the U.S. Auto Market

U.S. President Donald Trump's proposed 25% tariff on imported vehicles could significantly raise prices on low-cost new cars, disproportionately affecting working-class buyers. Analysts fear these tariffs may drive customers toward a tightening used car market. The automotive industry may face severe disruption, impacting both manufacturers and consumers alike.

In a move that could send shockwaves through the automotive industry, U.S. President Donald Trump is proposing a 25% tariff on imported vehicles. Analysts predict that working-class car buyers will bear the brunt, as these tariffs would drive up the prices of low-cost vehicles that are mostly manufactured abroad.

This substantial tax could narrow options for lower-income buyers, already burdened by the limited availability of new cars priced under $30,000. As a result, many may be pushed toward the used car market, exacerbating demand and leading to price hikes in this sector too.

Industry experts caution that these tariffs might backfire economically. Some automakers could abandon entry-level models entirely, further squeezing the market as consumers wrestle with decreasing vehicle affordability.

(With inputs from agencies.)