On the Dash:
- Tariffs added $30 billion in industry costs, driving a 10.4% increase in average vehicle MSRP.
- Dealers absorbed 4.5% of price increases, highlighting ongoing margin pressure and competitive pricing dynamics.
- Domestic production rose to 54.4%, but affordability challenges are pushing entry-level buyers toward used vehicles.
In the year since tariffs were imposed, the automotive industry has incurred an estimated $30 billion in additional costs, according to data released Monday by Kelley Blue Book parent Cox Automotive.
Those costs have been passed on across the market, with the average suggested retail price increasing 10.4%. Imported vehicles saw the largest increases, rising an estimated $5,000 to $8,900 per vehicle. Domestic vehicles also experienced cost increases of $1,600 to $2,000 per vehicle due to tariffs on materials such as steel and aluminum.
Despite higher list prices, consumers are paying 5.9% more on average over 37 weeks for model year 2025 and 2026 vehicles. Dealers have absorbed the remaining 4.5% through negotiation and competitive pricing pressures, particularly among imported vehicle brands.
Automakers have also adjusted pricing strategies to manage tariff impacts. Some costs have been incorporated into destination fees, which are added to the final sale price. Destination fees for 2026 models have reached new highs, including $2,795 on most full-size GM and Ford trucks and SUVs. GM increased destination fees 40% in one year on the Chevrolet Silverado, which, based on sales volume from 2025 to 2026, would generate $748.8 million in additional revenue from the Silverado and GMC Sierra.
At the same time, tariffs have influenced production decisions. Domestic production increased 4.9% during the measured period, reaching 54.4% of all new vehicles sold. Automakers, including Toyota and Stellantis, have announced multi-billion-dollar investments in the U.S., while Honda and Hyundai are increasing output at existing U.S. facilities.
However, affordability remains a challenge. Higher prices and limited investment in lower-cost vehicles have reduced the availability of entry-level options, increasing pressure on buyers and driving a shift toward the used-vehicle market.
Tariffs implemented under Section 232 of the Trade Expansion Act of 1962 do not include a sunset clause, meaning policy changes would require future administrative action or legal intervention.
Industry analysis indicates the tariffs have achieved the stated goal of increasing domestic production, while also contributing to higher vehicle prices and changes in market dynamics.
