Trump doesn’t seem to understand how car prices work

President Donald Trump says he “couldn’t care less” if car prices rise because of his tariffs. They will – whether he wants them to or not.

President Donald Trump says he “couldn’t care less” if car prices rise because of his tariffs. They will – whether he wants them to or not. The Trump administration announced last week that it will impose a 25% tariff Thursday morning on all cars imported from foreign countries, including Canada and Mexico. Eventually, tariffs will be placed on imported auto parts, too. Although the parts tariffs are aimed at foreign-made components, those levies could raise the cost to produce cars at US factories, because a significant percentage of the parts used to manufacture the 10.2 million cars built at American plants each year are imported from other countries, according to federal government data. Industry experts estimate that the parts tariffs alone could increase production costs by $3,000 to more than $12,000 per vehicle for cars assembled at US plants. But it’s not just the cost of tariffs could drive up prices. It’s the law of supply and demand. Trump said he expects tariffs to eventually lower American car prices as manufacturers shift production to the United States. That could take years to accomplish with uncertain outcomes. In the meantime, basic economics will weigh on virtually all US car purchases - foreign and domestic, new and even used. Expect car prices that are already near record levels to go even higher once tariffs dramatically upend the car market.