Tariffs to cause price increases for new cars and auto repairs, experts say
Average monthly payments for new and used cars are at record highs, but they’re expected to increase even more as tariffs strain automakers.
The effects of President Donald Trump’s tariffs on goods imported into the United States will likely soon be felt in the automotive industry, experts say.
Terence Lau, dean of Syracuse University’s College of Law and former counsel to the Ford Motor Co., said he expects automakers will start to increase prices for new vehicles later this year. It hasn’t happened quite yet, Lau said, but it’s certainly on the horizon.
“What we have seen is automaker profitability go down,” he said. “Automakers are paying billions of dollars in tariffs. So far, they haven’t passed those costs on to consumers. Now, I do think, and I anticipate, that we will see some price increase for model year 2026 vehicles as the model year ‘26 vehicles hit the dealer lots sometime this fall.”
It may not be dramatic at first; he expects something on the order of 5-6%.
“I think that’s a given because of the increased costs automakers are facing,” Lau said.
The cost of vehicles is important in New Jersey, a state where about 63% of commuters drove to work alone and another 8% carpooled in 2023, according to data from the U.S. Bureau of Transportation Statistics.
And vehicle costs are already a potential strain on New Jerseyans’ budgets. As of the second quarter of 2025, information from Edmunds shows the average monthly payment for a new car is $756 per month, and the average for a used car is $559 per month. These numbers, the car-shopping website says, are at all-time highs. As many as 19% of all new-car buyers are paying more than $1,000 per month for their vehicles.
“I think five years ago, if you said the average vehicle transaction price in the United States was gonna be $50,000, people would have been really surprised, because most people can’t afford a $50,000 car,” Lau said. “But that’s where we are. That’s where we are today.”
Lau said he expects cars to continue to become less and less affordable as the tariffs kick in and prices continue to increase, pushing more new-car buyers into the used-car market.
“You’re seeing Hondas — Accords — and Camrys reach a $40,000 or $45,000 price point,” Lau said. “Why? Because there’s more margin there, and more room for automakers to play with. So I think you’re going to start seeing more of that happen. What that means, I think, for lower and middle class consumers, is there could be fewer choices of 25, 30,000 dollar vehicles.”
As prices continue to rise, Lau said, it’s likely consumers will see increasing options for extending the length of their loans.
“We’ll start seeing more of these really kind of aggressive financing products,” he said. “We’re seeing 84-month loans now. They’re still quite unusual, but I think we’ll start to see more and more 84-month loans to try and bring that monthly payment down, so folks can afford their first vehicle purchase. So I think those are some of the dynamics in the next three to five years.”
Even New Jersey drivers who aren’t in the market for a new or used vehicle will likely face another consideration: the cost of parts.
Charles Bryant, executive director of the Alliance of Automotive Service Providers of New Jersey, says many auto repair shops are waiting to see how tariffs will affect their costs.
Prices for imported motor vehicle parts already increased by about 5% between December 2021 and December 2024, according to data from the U.S. Bureau of Labor Statistics. Bryant said he expects tariffs to raise prices even more.
“I don’t think the tariffs have really set in just yet on the parts, but I know it’s going to be an issue,” Bryant said. “Sometimes it’s already hard to get parts, especially if they’re coming from out of state, out of country, things like that. That’s going to turn into a major problem, I’m sure.”
Imported parts are increasingly a necessity even for many vehicles produced by American manufacturers. According to the Made in America Auto Index from American University’s Kogod School of Business, a little over half of the parts in vehicles sold by domestic automakers like Ford and General Motors were sourced in the U.S. in 2024.
“There is no such thing as an American car company anymore,” Lau said. “Every single car company is globally integrated.”
