Auto Industry Faces Price Hikes and Uncertainty as Tariffs Are Reinstated Amid Legal Battles
On May 29, 2025, a U.S. Court of Appeals temporarily reinstated certain auto tariffs despite a prior ruling by the U.S. Court of International Trade deeming them unauthorized under the International Emergency Economic Powers Act, leaving the auto industry in legal uncertainty.
The 25% tariffs, impacting about 8 million imported vehicles annually, have already driven a 2.5% rise in average new vehicle prices to $48,699 in April, with some models projected to increase by $2,000 to $15,000 depending on import reliance.
While current inventories have delayed the full impact on consumers, prices are expected to climb further as tariff-affected vehicles enter the market.
Industry supply has tightened to 2.6 million vehicles with a 60-day supply, and rising new car prices are boosting demand for used vehicles, pushing the Manheim Used Vehicle Index to its highest point since October 2023.
Tariffs to Push Canadian Vehicle Prices Higher, But Impact Softened by Incentive Cuts
New-vehicle prices in Canada are expected to rise beginning in June as U.S.-built pre-tariff inventory is depleted and replaced with vehicles subject to Canadian counter tariffs of up to 25 percent, though the actual price hikes will be more modest than initially feared.
U.S. Gas Prices Hold Steady, Remain Among Lowest in Years Despite Regional Swings
As of May 28, 2025, U.S. gasoline prices average $3.16 per gallon, slightly up from the previous week but 41.7 cents lower year-over-year, according to the EIA. GasBuddy reports a similar trend, with prices 3.1 cents higher than a month ago but 43.0 cents lower than last year, and the most common price holding steady at $2.99.