Car Tariffs 2025 are already hurting American car buyers, especially those shopping for new vehicles under $30,000. When former President Donald Trump introduced the new tariff plan, he promised lower prices. However, a new study from Cars.com shows the opposite—inventory is tightening and costs are rising across the board.
According to the study, imports make up 92% of all new cars under $30,000. Only the Honda Civic and Toyota Corolla come from U.S. factories, and even those have versions built abroad. This makes the most affordable segment the most exposed to tariffs.
Inventory for all new cars rose 5.6% in early 2025. But for cars under $30,000, the increase was only 3.9%. Dealers rushed to stockpile affordable models before the tariffs began in April. This move briefly boosted sales by 3.9% year-over-year in March and April.
Buyers trading in vehicles before the tariff spike pushed up the supply of used cars. As a result, used prices dipped slightly in the first quarter. But they bounced back by 1.6% in the second quarter as dealer inventories adjusted. The limited supply of pre-tariff cars is vanishing quickly.
While average new car prices have only gone up by $97, the breakdown tells a different story. Cars from the UK now cost over $10,000 more. Vehicles from the EU saw a $2,500 increase. Meanwhile, models from China, Korea, Canada, and the U.S. saw modest price reductions. U.S.-built cars dropped by around $200 on average.
Automakers are already responding to Car Tariffs 2025. They’re boosting production of base and premium trims while cutting back on mid-level versions. Entry trims target price-sensitive buyers, while higher trims offer more profit margin. This strategy helps cushion the impact of rising costs while maintaining customer reach.
Cars.com also surveyed EV buyers. More than half—53%—said federal tax credits influenced their decision. That’s important because the $7,500 new EV credit and $4,000 used EV credit will both expire after September 2025. The study suggests that ending these incentives could stall the 28-month growth streak in EV inventory.
The used EV market seems to be stabilizing, but it faces pressure. Without credits, many buyers may hesitate to invest in an electric vehicle. Rising interest rates and overall car prices add to the challenge.
Car Tariffs 2025 continue to reshape production decisions and consumer behavior. Automakers might increase local manufacturing to cut exposure. But that takes time. For now, shoppers looking for affordable transportation face fewer options and rising prices.
A policy designed to protect domestic jobs now limits choice and raises costs for budget-conscious Americans. With the second half of 2025 underway, more changes are coming. Buyers, dealers, and manufacturers all need to adjust to this new pricing landscape.