U.S. trade tariffs have so far been a mixed bag for auto retailers and consumers, but as the fast-shifting situation unfolds, conditions are poised to drag down sales and raise prices, a new Cox Automotive analysis predicts.

After many consumers hit dealerships in the spring to take advantage of pretariff prices, sales slowed but picked up again in July due to unmet demand and healthy equities market wealth, said Cox Executive Analyst Erin Keating. It was the strongest seasonally adjust annualized rate for July since 2019.

Tariffs as they now stand with negotiations outstanding for many countries would add the equivalent of $2,500 in costs for each imported vehicle sold in the U.S., to Keating reported. Vehicles assembled in the U.S. have the added cost of other tariffs on aluminum, steel, copper and battery components, she pointed out.

Breaks U.S. automakers are getting from the Trump administration on vehicle emissions requirements are helping to offset tariff effects, though it scheduled the end of electric-vehicle tax breaks and charging infrastructure funding.

In fact, Keating theorized that the emissions regulation curbs could move automakers to focus on the larger and more lucrative models in their lineups over more affordable ones, thereby inflating prices. 

She also expects automakers to start to pass along tariff costs to consumers. Cox therefore estimates that the average new-vehicle price will therefore reach $50,000 this year and that sales will be down year-over-year to under 16 million units “as higher prices continue to move the auto market in a direction that favors high-net-worth households with excellent credit, leaving many on the outside looking in.”

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