The Supreme Court’s Tariff Ruling Won’t Bring Car Prices Back to Earth

This has never been it costs more to buy a new car. The average transaction price last month for buyers in the United States was $48,576, up nearly a third from 2019, according to Edmunds. The “affordable” car – $20,000 or less – is dead.

High prices are linked to many economic dynamics: continued pandemic-era supply chain issues, the introduction of expensive technology into everyday cars, higher labor and raw material costs, and new tariffs imposed by the Trump administration on steel, aluminum, and imported cars themselves.

Now, despite a U.S. Supreme Court ruling that removes some of those Trump tariffs, car buyers likely won’t get any relief.

“The basic cost structure facing the auto industry did not fundamentally change overnight,” Jessica Caldwell, Edmunds’ chief research officer, wrote in an emailed statement. In simpler terms: cheaper cars won’t come, at least not because of this decision.

The Supreme Court’s decision hinders the president’s authority to use the International Emergency Economic Energy Act to impose tariffs in response to emergencies. Trump has used this power to slap tariffs on countries around the world, the emergency being “large and persistent” trade deficits. The administration has imposed other new taxes on Canada, China and Mexico due to what it calls emergencies related to the flow of migrants and drugs to the United States.

But most of the tariffs affecting the auto industry come from another law, Section 232 of the Trade Expansion Act. This provision can apply to imports that “threaten to harm” the country’s national security. Tariffs on steel, aluminum, copper – key raw materials for cars – as well as imported auto parts and vehicles themselves fell under this provision and are still in force. This includes 15% tariffs on cars built in Europe, Japan and South Korea.

Automakers have actually done a good job protecting consumers from the effects of tariffs, Caldwell says. Although retailers have blamed tariffs for the steady rise in prices of consumer goods such as electronics and appliances, car prices have risen only 1 percent since the same period last year, according to company data. But as the tariff regime drags on, that could change in ways that make new car buyers even less happy.

“If cost pressures continue to mount, automakers may have less room to protect buyers from higher prices,” Caldwell says, “but for now, the broader impact on the market is still being felt.”