Spurred by the threat of rising car prices because of tariffs, Ricardo Rinconeño of Orland Park bought a 2025 Chevy Equinox last Friday.
Rinconeño said he and his wife, Nicole, were considering replacing her 2015 car and the threat of tariffs spurred them into action.
“I said, ‘Why wait? We don’t know what’s going to happen.’ If it wasn’t for the tariffs, I probably would have waited another year,” he said.
Rinconeño isn’t alone. Shoppers have been rushing to dealerships in hopes of snagging a car at a price they can afford before any tariff-fueled price hikes push them out of the market. But car dealers in the Chicago area stressed that any price increases from tariffs will likely affect inventory slated to arrive in the coming months — not cars already in their showrooms or on their lots.
On Wednesday, President Donald Trump announced 25% tariffs on all cars assembled outside the U.S. The tariff will also apply to imported auto parts starting May 3, which will add to the cost of cars made in the U.S. as well as auto repairs. The tariffs were part of much larger move declaring taxes on imports from all countries.
While cars were once made in the same country as their corporate headquarters, most automakers now have global production networks. Car parts like a battery pack for an American electric vehicle can be made in the U.S. but shipped to an assembly factory abroad where the finished car is then shipped back into the U.S. — a process that can now be subject to multiple taxes.
The Chevrolet Equinox that Rinconeño bought is made by Detroit-based General Motors, but the vehicle is assembled in Mexico and 49% of its parts are from that country.
While a partial exemption is being made for cars made in Mexico and Canada because of the U.S. free trade agreement with those countries, General Motors would still have to pay a tariff if components were made in other countries.
Foreign automakers like Toyota and BMW will see higher taxes. BMW, once primarily made in Germany, now is manufactured in 15 countries, including Germany, China, South Africa and the United States.
What this means for a consumer is car prices impacted by tariffs will vary widely based on the automaker and the model. The Budget Lab at Yale University estimated Trump’s auto tariffs will raise prices by 2.3% in the short-run, “a loss of purchasing power of $3,800 per household on average.”
For now, people like Katie Lopez, a 48-year-old social worker from Mount Greenwood, are on a mission to buy a car before any tariffs cause potential price increases.
“Now the tariffs are coming. My goal is to have a new car by the end of the day on Saturday,” Lopez said.
Dealers across the Chicago area have been preparing the last couple months by increasing their inventory before tariffs impact pricing.
“We’re sitting on 1,300 new cars with another 300-400 inbound that are pre-tariff. So, we’re not going to feel any effects for a few months,” Enzo Costa, director of sales at Patrick Auto Group, said. The family-owned company has eight dealerships across the Chicago area that sell BMW, Mini, Land Rover, Jaguar, Volvo, Cadillac, Genesis and Hyundai.
Costa said the threat of tariffs is something his sales team is using to spur customers into action — and it’s working.
“Saturday, we had a record day,” he said. “We sold over 80 cars. It was 100% because they wanted to beat the tariffs.”
Automakers recently reported strong sales this year with most seeing double-digit gains. For example, Chevrolet sales rose 14% during the first quarter, making it the brand’s best quarter since 2019.
Car companies sold nearly 1.6 million vehicles in the U.S. in March, up 13.6%. Total sales for the first quarter was more than 3.9 million vehicles, Motorintelligence.com said Tuesday.
But automakers are still planning to take a hit. Stellantis, who announced plans in January to reopen its Belvidere assembly plant, said Thursday it would pause production at plants in Canada and Mexico because of the new round of tariffs. The pause means supporting plants in Michigan and Indiana will be idle, with 900 workers temporarily laid off for about two weeks. The automaker owns car brands like Jeep and Ram.
Costa, of Patrick Auto Group, said while the dealership will not be impacted right now, he’s worried that if tariffs stay in place for an extended period, prices will rise.
“The impact will be on cars that are being produced [now]. There’s nothing really to worry about until the summer months,” he said.
Economist Mary Lovely, senior fellow at the Peterson Institute for International Economics, said more households will be priced out of the new car market — where prices already average about $49,000 — and will have to hang on to aging vehicles.
“We’re going to see reduced choice. … These kinds of taxes fall more heavily on the middle and working class,’’ Lovely said.
Sam Alfano, used car manager at Al Piemonte Nissan in Melrose Park, said Nissan is trying to further motivate buyers by offering $500 to $1,750 off the sticker price.
On Thursday, Ford Motor Co. announced a new promotion offering employee pricing on select 2024 and 2025 vehicles. “We understand that these are uncertain times for many Americans. Whether it’s navigating the complexities of a changing economy or simply needing a reliable vehicle for your family, we want to help,” Ford said in a news release.
Alfano said consumers should know that although the tariffs went into effect on Thursday, the cost of cars at dealerships now will not be impacted.
“The cars we have, those are the prices. They won’t increase because they are already here,” Alfano said.
Trump has said one of the goals of his sweeping tariffs is to push companies into bringing manufacturing back to the U.S. But companies, including automakers, have plants around the world to accommodate global sales and maintain competitive prices, and it could take years for companies to design, build and open new U.S. factories.
Jeremy Gleason, general manager of McGrath Subaru Evanston in Skokie, said while he expects a bump in sales for the next couple months, he worries that automakers will slow overseas production.
“Even if these manufacturers decide to take the hit for a while, they’re going to reel in production. I can’t see them going full on — shipping as many cars as they can — if they’re going to take the hit for tariffs,” he said. “We’re going to be low on cars again.”
Costa said manufacturers have told him that prices will be locked through April. After that, if tariffs are still in place, consumers may feel the impact.
“We’re talking a 25% tariff on parts, and that’s going to hit directly,” he said. “We all are assuming the cars will be raised up in price by 25%.”
Contributing: AP