Avoid the Sticker Shock. Buy Now Before Tariffs Take Effect!

Major auto tariffs are set to take effect on April 3, and industry experts predict that new vehicle prices could rise by thousands. If you’ve been thinking about buying a new car, now is the time to act!

As an automotive industry experts, we want to speak to you directly: significant import tariffs are about to hit the auto market, and they will immediately drive up car prices across the United States. Minnesota car buyers—who are among the savviest and most informed—need to understand what’s coming and how to stay ahead of these price hikes.

In this article, we’ll break down exactly what the 2025 auto tariffs entail, how they’ll impact vehicle prices and availability, and what you can do right now to beat the increases.

What Are the 2025 Auto Tariffs and Who Do They Impact?

In response to ongoing trade disputes, the U.S. government is implementing sweeping new auto import tariffs. These tariffs are essentially import taxes on cars, trucks, and automotive parts from key trading partners. Here’s an overview of the tariffs and who is affected:

25% Tariff on Canada & Mexico Imports

All vehicles and auto parts imported into the U.S. from Canada and Mexico will face a steep 25% tariff starting April 3​. This is huge, because a large share of “American” cars are actually built or assembled in Canada or Mexico. Popular models assembled over the border (from domestic trucks to foreign-brand SUVs) will suddenly cost significantly more to bring into the U.S. market.

20% Tariff on Imports from China

The U.S. is also levying a 20% tariff on all imports from China​. This includes a lot of auto parts and components that U.S. manufacturers rely on (electronics, batteries, specialty parts), and even some fully built vehicles. Any car that uses Chinese-made parts (which is most vehicles to some extent) will see higher production costs.

25% Tariff on Steel and Aluminum

A 25% tariff on imported steel and aluminum went into effect in March​. Auto bodies, frames, engines, and other components use these metals, so this adds cost to domestically produced vehicles as well. Even U.S. assembled cars aren’t safe from cost increases, since higher metal prices raise manufacturing expenses.

“Reciprocal” Tariffs on All Vehicles

Canada and Mexico (and possibly other nations) are expected to retaliate with their own 25% tariffs on vehicles​. This means any American-made cars exported abroad will be taxed, and it further complicates the supply chain. In effect, cross-border auto trade is grinding to a halt under a punitive 25% tax each way. No matter where a car is built, if it’s crossing the border, it’s getting hit with a tariff.

Who is impacted? In short, almost everyone in the auto market. These tariffs hit imports from major auto-producing regions, so both foreign and domestic automakers are affected.

Here’s a breakdown of what we know so far:

Bottom line: no new vehicle will be untouched by these tariffs’ effects.

To put it simply, the tariffs are a massive, across-the-board price shock to the auto industry. Automakers, dealers, and consumers in Minnesota and nationwide will all feel the impact. Now, let’s look at how this translates into actual prices on the lot.

U.S. Vehicle Prices Will Jump Overnight

When automakers get slapped with a 25% cost increase on a vehicle (or its parts) at the border, they are not going to eat that cost – it will be passed on to you, the buyer. Manufacturers will adjust MSRPs upward, and dealers will have to raise prices to maintain their margins. Even on domestically built cars, the increased cost of parts and materials will force prices higher.

How much more will you pay? Industry analysts predict at least a $3,000 increase on the price of an average new car built in the U.S. as a result of these tariffs​. And for imported models, the jump could be even greater – “imports (will cost) much more” than that $3K.

In other words:

It’s also important to note why this will happen overnight. The tariffs take effect April 3, meaning any vehicle or part entering the U.S. after that date incurs the new tax. Cars already on U.S. soil or on the lot might be temporarily spared that import fee.

The key is to get ahead of these changes. That brings us to our next point: how you, as a Minnesota car shopper, can prepare and act now to minimize the impact on your wallet.

How Minnesota Car Buyers Can Beat the Tariff – Act Now to Save

With only a short time before these tariffs kick in, the best strategy for consumers is simple: act now. If you’ve been on the fence about buying (or leasing) a new vehicle, the window to get in before the price hikes is rapidly closing. Here’s how Minnesota car buyers can prepare and potentially save thousands by acting before April 3:

Buy Your New Vehicle Now, Not Later

This cannot be overstated. If you purchase a vehicle before the tariffs take effect, you avoid those extra import taxes baked into the price. Even if you feel slightly rushed, remember that waiting could cost you $3,000 or more in higher prices​. The difference of a week could be the difference between getting a good deal and paying a premium.

Check our inventory today and identify a suitable vehicle that meets your needs.
 

Take Advantage of Current Prices and Incentives

As of right now (late March 2025), many dealers still have cars on the lot at pre-tariff prices, and some are offering incentives or discounts to clear out Q1 inventory. Those incentives are likely to dry up quickly once the tariffs hit​.

For example, if there’s a cashback rebate, special lease offer, or financing deal available, locking it in before April could save you money on top of avoiding the tariff hike. In a tighter post-tariff market, you probably won’t see those kinds of offers.

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Secure Financing Before Rates Climb

Another reason to act now is to lock in your auto loan financing. Interest rates have been rising over the past year, and the added inflationary pressure of tariffs could lead to even higher borrowing costs later in 2025.

Currently, average auto loan rates are around 9.7% for new cars and 14.7% for used​ – historically high levels. If you wait, you risk not only paying more for the car, but also potentially financing it at a higher interest rate if lenders tighten conditions. Many manufacturers occasionally offer promotional APR deals, but with the anticipated cutback in incentives, those low-APR offers might become rare. It’s wise to shop around for a loan now or get pre-approved at today’s rates.

Prioritize In-Stock Vehicles

If possible, choose a vehicle that is already on the lot or in the U.S. supply chain. Those units were likely imported or built with pre-tariff costs. If you order a car that has to be built and shipped after April 3, it will almost certainly reflect the new tariffs in its price. Our inventory still has a variety of models on hand, so focus on what’s available immediately. You’ll avoid potential delays and extra costs.

With our wide variety of stores available we can help you locate a similar model at another location or swap to get you the car you want from our current stock.

Be Ready to Act Quickly

Do your research now (vehicle reviews, pricing, trade-in value, etc.), so you’re ready to move fast.

Check out our YouTube Channel for in-depth Walkarounds & Reviews, Comparisons, & more!

When you go to the dealership, have the necessary documents and a plan for your down payment or trade-in. The goal is to complete the purchase before the tariff effective date.

Learn more and get an instant vehicle valuation today from WalserBuysCars.

It’s rare that we see such a clear-cut case of “sooner is better” in car shopping, but this is one of those times.

Ripple Effects: Used Car Prices, Financing Rates, and Vehicle Incentives

The new car market doesn’t exist in a vacuum. Dramatic changes to new vehicle prices and supply will send shockwaves into the used car market, the financing environment, and the overall automotive economy.

Used Car Prices Heading Up

If new cars become scarce and expensive, more buyers will turn to the used car market, increasing demand there. At the same time, fewer new car sales means fewer trade-ins and fewer leased vehicles returning to the market, which constricts used supply.

This combination is a recipe for rising used car prices. We’ve seen it before during past inventory crunches – used vehicles can sometimes appreciate in value in the short term when new car supply is tight. In this case, with new car prices set to jump, sellers of recent-model used cars will know they can ask more, since their competition (new models) just got pricier. Experts specifically note that “new and used prices rise” in tandem as a short-term effect of the tariffs.

So if you’re thinking you’ll avoid the hikes by buying used, be aware that used car lots in Minnesota will likely raise prices too (though a used car will still generally cost less than its new equivalent, the gap may close a bit). The sooner you buy, the better – just like with new cars. If you have a trade-in, its value might actually increase in the coming months, but that could be offset by the higher price you’ll pay for the next car.

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FAQ: 2025 Auto Tariffs and Car Buying Questions

What are the 2025 auto tariffs and when do they take effect?

The 2025 auto tariffs refer to a set of new U.S. import taxes on cars and automotive parts from certain countries. The major ones include a 25% tariff on all vehicles and parts imported from Canada and Mexico, and a 20% tariff on imports from China, among other measures.

There’s also a 25% tariff on imported steel and aluminum that indirectly affects car manufacturing. These tariffs officially take effect on April 3, 2025 (with some metal tariffs already in effect from March). Practically speaking, any vehicle or part entering the U.S. on or after that date will incur these extra taxes. The tariffs are a response to trade disputes, and they are scheduled to begin immediately – so the impact on pricing will be felt in early April 2025.

How will the April 2025 tariffs affect car prices in Minnesota?

They will affect Minnesota car prices the same way they will nationwide – by causing them to increase significantly. Minnesota dealerships get their inventory from the same manufacturers and sources as other U.S. dealers, so expect new car prices to jump by thousands of dollars in early April. Experts predict an average increase of at least $3,000 on U.S.-built vehicles due to higher production costs, and potentially even more on imported models (which are directly taxed 25% at the border).

So if a particular car model is currently $40,000 in Minnesota, it could be $43,000+ after the tariffs. Every brand from Ford and Chevrolet to Toyota and BMW will see some effect. Minnesota might feel an acute impact on vehicles that often come from Canadian factories (for example, some trucks and SUVs), since we’re geographically close and our dealers commonly stock those. In short, unless you purchase before April 3, budget for a higher sticker price on that new car. Used car prices in Minnesota are expected to rise as well, as more people shop used to avoid the new car premiums, tightening that market too.

Should I buy a new car before the tariffs take effect?

If you are in the market for a new car and can feasibly make the purchase now, yes – buying before the tariffs hit is highly advisable. By doing so, you will likely save a significant amount of money. Once the tariffs are in place, the price of the same exact car could be thousands of dollars higher.

There is a general consensus among industry experts and dealers that pre-tariff pricing is the “last good deal” for the foreseeable future.

The phrase “buy now or pay later” truly applies here. That said, ensure you’re ready: have your financing lined up, know what you want, and be prepared to act quickly. The goal is to have the deal finalized (or at least the vehicle reserved with a signed contract) before the end of April 2. Buying now not only avoids the tariff cost but also locks in any current discounts or incentives that are available (which likely won’t be around post-tariff). In short, buying before April 3, 2025, can potentially save you from the 10-25% price hike that the tariffs will cause on many vehicles.

Are used car prices going to increase as well?

Yes, unfortunately for consumers, used car prices are also likely to rise in the aftermath of the tariffs. Here’s why: as new cars become more expensive, demand for used cars (as a cheaper alternative) will increase. We’ll have more buyers who decide to hunt for a 1-3 year old used vehicle instead of new. At the same time, the supply of used cars will be constrained. If new car sales drop or slow down, fewer people trade in old cars, and rental companies hold their fleets longer (they won’t get new replacements easily), resulting in fewer used vehicles entering the market. This dynamic inevitably pushes used prices up. We already have indications that both new and used vehicle prices will rise together.

So, if you’re thinking of buying a used car in Minnesota, you should also try to do so sooner rather than later. By summer 2025, you may find that the used car you wanted costs notably more than it does today. On a positive note, if you have a car to sell or trade, you might fetch a higher value for it due to this surge in used prices – but any benefit there could be offset by the higher purchase price of the next car.

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How will auto tariffs affect financing and incentives?

The tariffs themselves don’t directly change interest rates or rebates, but they set off conditions that do. Firstly, as discussed, manufacturers will likely reduce incentives because when costs go up and inventory is limited, they don’t feel the need to offer as many deals.

So, expect fewer cashback offers, higher lease payments (since the vehicle’s residual values and costs are impacted), and a disappearance of those special APR promotions. Basically, the generous incentives we’ve seen in early 2025 could be cut back – the Walser update notes that incentives will decline in the short term.

Secondly, on financing: if the tariffs contribute to inflation and economic uncertainty, it could influence the interest rate environment. Auto loan rates are already relatively high (around 9-10% for new cars on average), and they could stay elevated or even rise if the Federal Reserve reacts to inflation signals.

Even if general interest rates don’t jump, some automakers might discontinue their subvented (subsidized) low-rate loan offers to save money, meaning consumers have to borrow at standard market rates. So the net effect is that financing a car may become more expensive both due to higher rates and because you’re financing a larger amount (thanks to the higher prices).

In summary, the tariff situation means don’t count on cheap financing or big incentives to save the day – the best bet is to capitalize on what’s available now before the landscape changes.

Don’t Wait – Secure Your Vehicle Before Prices Soar

Major auto tariffs are about to upend the market, but you have a brief window of opportunity to stay ahead of the curve. Minnesota car buyers who act now can beat the price hikes and avoid the worst of the upcoming tariffs. The key takeaways are clear: buying a new vehicle before April 3, 2025, could save you thousands of dollars, and even the used car market will heat up afterwards. If you’re an informed customer ready to make a smart decision, now is the time to do it.

The bottom line: don’t procrastinate.

Shop our inventory today, take that test drive, find your best deal, and pull the trigger on your purchase before the tariffs take effect.

By doing so, you’ll drive away knowing you made a timely decision and secured your new car at a price that might not be seen again for a long while. In an environment where prices are rising and supply is tightening, being proactive is your best advantage. Good luck, and happy car hunting – here’s to getting the vehicle you want without the post-tariff sticker shock!

Special thanks to Jonathan Smoke, Chief Economist at Cox Automotive and a valued partner of Women of Walser, for providing the core insights and statistics featured in this blog. For more information and market insights head over to Smoke on Cars for additional resources and information.