Car prices rose 45% during the pandemic, a rise primarily attributed to supply chain issues from 2019 to 2021. Recent 25% tariffs imposed on imports from Canada and Mexico could further constrain car part supplies, with potential price increases estimated at $3,000 initially. As scarcity worsens, prices could spike by an additional $10,000 by year's end. The average price of a new car now hovers near $50,000, and ongoing supply constraints may mirror the dramatic price hikes experienced during the pandemic.
The price of a new car is just short of $50,000, according to Cox Automotive. The pandemic period saw a 45% increase in car prices.
The 25% tariffs imposed by the Trump Administration on imports from Canada and Mexico will tighten the supply of auto parts rapidly.
TD Economics estimates the initial hit on US car prices due to tariffs at $3,000, potentially rising to $10,000 by year-end.
If Canada and Mexican tariffs persist for more than a month or so, car prices will rise significantly, mirroring pandemic-era increases.
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