Should Americans rush to buy a car before the tariffs? Here's what Trump says

President Donald Trump was asked Friday whether Americans should rush to buy cars now before his planned 25% tariffs on imported cars, light trucks and auto parts take effect. 

The new taxes, which are set to begin April 3 and expand in the following weeks. If the taxes are fully passed onto consumers, the average auto price on an imported vehicle could jump by $12,500, a sum that could feed into overall inflation.

What to know about Trump’s auto tariffs

What we know:

Trump is betting that his tariffs will cause the U.S. economy to boom.

The White House says these tariffs will foster domestic manufacturing and raise $100 billion in revenue annually, but economists stress that straining the auto industry's global supply chain brings significant disruptions. Dealerships and car repair shops will likely have little choice but to raise prices — leading drivers across the country to pay more for everyday maintenance and even car insurance. 

Brand new Toyota trucks are displayed on the sales lot at City Toyota on March 26, 2025 in Daly City, California.(Photo by Justin Sullivan/Getty Images)

The White House said the import tax would apply to "key'' auto parts, including engines, transmissions, powertrain parts and electrical components. And it could expand the tariffs to other auto parts "if necessary.’’

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For now, the Trump administration is exempting from the tariffs cars, light trucks and auto parts that qualify for duty-free treatment under the US-Mexico-Canada Agreement, a regional trade pact the president negotiated five years ago. Trump intends to narrow that exemption to content made in the United States, not Canada or Mexico. But that will require setting up processes to determine what qualifies as U.S.-made — something that could take weeks or months.

What we don't know:

It’s unclear whether the new auto tariffs would stack on top of 25% import taxes set to be levied next week on all goods from Canada and Mexico. That would mean cars from Canada and Mexico could potentially face new tariffs of 50%.

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Should you buy a car now before the tariffs take effect? 

What they're saying:

"I don't think so," Trump answered when asked Friday whether Americans should buy cars now to avoid higher prices. "I think you're going to have a country that's going to boom. I just spoke to Tim Cook of Apple. He's investing $500 billion in the United States, which he would have never … he told me I would never have done it if you lost the election. And I would have never done it if there wasn't a tariff system. 

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"That is an incentive for people to come, and remember, there are no tariffs," Trump continued. "All you have to do is do your work right here. If you have your company here, if you build your product, make your product, make your car or whatever it is you're making, no tariffs."

Trump said he expects trillions of dollars worth of new investments in American-made goods, adding that "many of them have already started."

Trump boasts new tax incentive for financing US autos

What's next:

Trump announced Friday that he’s planning a tax incentive for people who finance American-made automobiles, though it’s unclear when that new incentive will take effect. 

"If you buy a car in the United States that's made in the United States, when you borrow money, if you borrow money, you have interest payments, we're going to let you deduct the interest payment for income tax reasons. And I think that's going to more than pay for itself," he explained. 

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"I think I know more about deductions than any human being on Earth. But, you know, the truth is that, people that are middle income people that buy a car and actually have to borrow money, they're going to now get an interest deduction on their car if it's made in the United States, if it's made someplace else, that won't take place."