People Are Spending $48,000 on Their Cars: Will That Change If Trump Wins in 2024?
Over the past year, buying a car has become slightly more affordable for Americans. However, this could change if former president Donald Trump wins the 2024 presidential election.
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According to data from Kelley Blue Book, new car prices in May were lower year-over-year for the eighth consecutive month thanks to higher incentives and lower prices. At the beginning of May, the average new car transaction price was $48,389.
The results of the upcoming 2024 presidential election could significantly alter the current trajectory of vehicle prices, both used and new. In a March 17 campaign speech, Trump declared “We’re going to put a 100 percent tariff on every single car that comes across the line, and you’re not going to be able to sell those guys if I get elected.”
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Howard Gleckman, senior fellow at the Tax Policy Center, wrote that while Trump wasn’t clear about the target of his tariffs, a 100% tax on imported autos could be catastrophic. According to Gleckman, past experience with other goods suggests a tariff will likely increase the cost of motor vehicles, including domestic, imported, used and new. It could also cause thousands of U.S. workers to lose their jobs.
In his speech, Trump suggested he’d levy a 100% import tax on Chinese nameplate vehicles made in Mexico. At other times, Trump also proposed a 10% tariff on all imported goods, a 50% tariff on all imported Chinese cars, and a 60% tariff on all Chinese goods, Gleckman added.
Because U.S. automakers build cars with parts from all over the world, even China, this could drive up vehicle prices across the board. According to Gleckman, about one-quarter of cars and light trucks purchased in the U.S. are imports, and more than half of all vehicles sold in the U.S. are built by foreign companies, including Toyota and BMW. Forty-four percent of these are assembled in the U.S. using a mix of foreign and domestic parts.
Gleckman wrote that the economic impact of a 100% tariff on imported vehicles could come close to doubling their price as most of the tax would be passed along to consumers. American automakers could also take the opportunity to raise their prices as well, even before accounting for their higher costs from tariffs on overseas imports, Gleckman noted.
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This article originally appeared on GOBankingRates.com: People Are Spending $48,000 on Their Cars: Will That Change If Trump Wins in 2024?