President Donald Trump’s recent announcement of a 25% tariff on imported vehicles is set to adversely impact working-class car buyers in the United States. Most low-cost new cars available in the country are manufactured abroad, and as a result, these buyers will face increased prices.
The expected tariff-induced price hikes will also lead to higher costs in the used car market, where demand is projected to surge as the supply of affordable new vehicles diminishes. Currently, new cars priced below $30,000 are becoming increasingly rare, with the average price of a new vehicle approaching $50,000.
Analysts indicate that manufacturers can only maintain profitability on economy cars by producing them in countries with lower labor costs. A recent analysis revealed that only 16 models have an average price under $30,000, and most of these are assembled outside the U.S., primarily in Mexico, South Korea, and Japan.
The tariffs may drive up prices to the point where these vehicles become unaffordable, or even force some manufacturers to discontinue them altogether. Many of Trump’s rural supporters, who significantly backed him in the 2024 election, could feel the most strain from these tariffs.
Approximately half of the voters with household incomes below $50,000 supported Trump, making them particularly vulnerable to increased vehicle costs. Despite this, Trump has expressed indifference to potential price hikes, suggesting that higher foreign car prices will drive consumers to buy American-made vehicles.
However, many American automakers also produce cars abroad, including several models priced under $30,000. Industry experts warn that the tariffs could hinder the availability of affordable vehicles, leading households to prioritize other spending and delaying large purchases.
As a result, the vehicle market may face significant shifts towards higher prices and limited options, primarily affecting working-class buyers.