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Anna Kaplan
News and Trending Reporter
Brian Cheung
President Donald Trump announced March 26 he would be implementing a 25% tariff on imported cars next month, which analysts say could drive up the cost of buying both foreign and locally made vehicles in the U.S.
The 25% tariff will be applied to imported passenger vehicles and light trucks, as well as on auto parts like engines and transmissions, according to the White House.
Consumers could start paying thousands to tens of thousands more on the lot, depending on how much of the car is imported, according to analysts’ estimates.
The tariffs will go into effect at midnight on April 3, and Trump has said they will be “permanent,” according to CNBC.
Brian Cheung, NBC News business and data correspondent, joined TODAY on March 28 to explain what will — and what will not — get more expensive for consumers under the new tariffs.
“Probably buying sooner rather than later is a better strategy,” Cheung says.
Cheung cited Goldman Sachs estimates that the price of a foreign import into the U.S. could increase from $8,000 to $15,000, and domestically made cars could increase $3,000 to $8,000.
“Interestingly, even insurance costs can go up, because car parts are also part of those tariffs. So if the car parts are more expensive, so are the repairs,” Cheung said, adding that Insurify, an insurance comparison shopping website, estimates that insurance could go up by as much as $189 per year.
“First off, it’s not as simple as, ‘OK, well, the tariffs will only apply to non-American cars,’ because I’ll give you an example: the Ford Edge, that’s an American car. Well, they make that in Canada, and the Subaru Outback, which is a Japanese car, they make that in Indiana,” Cheung explained.
Cheung suggested for car buyers to go to the dealership and ask which cars are made domestically and which ones might be imported, as imported vehicles and car parts are facing the tariffs.
“Also take a look at maybe the used car market, because obviously, if the car is already made, ideally, the tariff impact shouldn’t be as high,” Cheung said. “The average used car price is over $20,000 cheaper than the average new car.”
Cheung added that experts have said that used car prices could also rise if more people are no longer looking for new cars.
“So everything’s going to get more expensive,” he said.
“The Chinese tariffs … have been in effect — it’s 20% right now, and the Trump administration had promised ratcheting that up to as high as 60% on the campaign trail,” Cheung said.
The Consumer Tech Association, a standards and technology trade organization, projects the cost of a laptop could increase by $357, gaming consoles could increase by $246 and a smartphone could increase by $213.
As for home renovations, the Trump administration has been weighing lumber tariffs as well, Cheung said.
“A kitchen cabinet, for example, the average cost is over $7,000,” Cheung said. “So at a 25% tariff rate, if it’s passed on dollar to dollar to the consumer, that could add up to $1,800 in costs, so the same cabinet might be $9,000.”
Cheung said consumers could go ahead and buy the materials, even if they aren’t ready to complete the project yet, and just store the items until they’re ready to get the contractor involved.
Anna Kaplan is a news and trending reporter for TODAY.com.
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