MADISON, Wis.–Should President Trump follow through with his steep tariffs on automobiles, consumers will be facing steep price increases on vehicles, with the only silver lining being that savings over the life of the loan will only be even bigger for those who get a loan from a credit union, according to CU economists.
Analysts are forecasting President Trump’s 25% tariffs on both foreign and locally made vehicles will lead to big price increases for consumers. The president has said he plans to institute tariffs on key auto parts, including engines, transmissions and powertrain components.
Prices that consumers pay on the lot could increase by $4,000 to $15,000 per vehicle, depending on how much of the car is imported, according to several analysts’ estimates quoted by the Wall Street Journal.
The tariffs, which are to begin April 13, do include some exceptions, such as vehicles covered by the North American trade deal known as the USMCA, which will only face the tariff for the “non-U.S. content” of their vehicles.
What the Tariffs Mean for Members
With the proposed 25% tariffs, new car prices would rise by $5,000 to $15,000 according to Goldman Sachs,” economists with America’s Credit Unions told the CU Daily in a statement. “The $10,000 midpoint of the Goldman Sachs price increase–$10,000) – suggest an identical increase in amount financed. So, the average consumer car loan at origination would jump from $40,000 currently to $50,000 with tariffs. That 25% increase in amount borrowed would result in an identical 25% increase in life-of-loan savings for consumers who finance at credit unions–from $7,300, to $9,125.”
After noting that credit unions typically offer lower auto financing rates than other lenders, America’s Credit Unions added, “From a consumer perspective the overall life-of-loan savings is very important – but that life-of-loan savings is a reflection of the total monthly savings that are large and that will increase even more as prices increase, all else equal,” the statement continued (the emphasis was made by America’s Credit Unions). “From a budgeting and affordability perspective, the monthly savings are critically important.”
