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Denver economics professor weighs in on Trump's 25% tariffs on imported vehicles

Making Ends Meet: professors in Colorado discuss the impact of tariffs
Making Ends Meet: professors in Colorado discuss the impact of tariffs 02:14

One of the industries that will be impacted the most by President Donald Trump's tariffs is the auto industry. The president's 25% tariffs on imported cars took effect last week, with the tariffs also impacting imported car parts starting in May. That leaves a lot of questions for potential car buyers and people who already own vehicles.

Dr. Kishore Kulkarni, an economics professor at Metropolitan State University of Denver, said this is uncharted territory for the auto industry and will have a big impact on potential car buyers, who could end up paying thousands more dollars to buy a car in the months ahead.

"Without a doubt, cars will be more expensive next week than they are today," said Kulkarni. 

While Kulkarni said that while it's still hard to predict how much prices could go up, some other economists are saying car prices could rise $8,000 to $15,000 depending on if the car is made here or overseas.

Carmakers Idle Plants, Rethink Prices As Trump's Tariffs Hit
A new Jeep Wrangler 392 Rubicon vehicle displayed for sale at a Stellantis NV dealership in Miami, Florida, US, on Saturday, April 5, 2025. Car buyers have been rushing to US showrooms to lock in deals before potential price hikes, and automakers are bracing for significant potential cost increases and supply-chain turmoil, with some companies planning to temporarily halt production or reduce overtime.  Eva Marie Uzcategui/Bloomberg via Getty Images

With the tariffs, all cars will be impacted, including cars being imported to the United States and cars being made here in the country.

Kulkarni added that cars are very complex products, and the auto industry is likely the number one industry where parts come from different countries. He said there are very few cars that are completely American-made with nothing imported. For example, Tesla is considered American-made but does have several imported car parts.

"For many cars, assembly is somewhere, the engine is from somewhere, body parts are somewhere. So clearly, a car is a very complex commodity that needs a lot of imported stuff and imported inputs, and therefore, car companies will find a way to adapt to all this," said Kulkarni.

Kulkarni also said the prices of used cars will go up, too because of supply and demand. As the prices of new cars rise, some buyers might look into buying a used car instead, therefore raising prices in the used market too. The costs of getting your car serviced or repaired could also go up.

With the move, some U.S. automakers have already announced layoffs or delayed price hikes, while some overseas companies have paused car shipments to the U.S.

Kulkarni isn't surprised and said there would be supply chain impacts as too.

"As the cost goes up, there won't be as much responsive supply because other countries will be a little lethargic sending stuff to U.S. rather than some other countries," said Kulkarni. "Outside countries will always find ways to channel their products to some other countries in the world than in the U.S."

Vehicles already on lots are not impacted by tariffs. So, if you're thinking about buying a car and can afford it, it's recommended to buy it sooner rather than later to avoid paying thousands of dollars more. However, don't rush to buy a car if you're not ready.

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