WSJ Your Money Briefing - How Trump’s Tariffs Could Boost Already High Car Prices

Episode Date: April 9, 2025

President Trump’s auto tariffs could drive up prices and lead to higher monthly payments for consumers. Wall Street Journal reporter Joe Pinsker joins host Ariana Aspuru to discuss whether car shoppers should buy now or wait it out. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Okay, Martin, let's try one. Remember, big. You got it. The Ford It's a Big Deal event is on. How's that? Uh, a little bigger. The Ford It's a Big Deal event. Nice. Now the offer? Lease a 2025 Escape Active all-wheel drive from 198 bi-weekly at 1.99% APR for 36 months with $27.55 down. Wow, that's like $99 a week.

Yeah, it's Briefing listeners. This is Arianna Aspuru. Here at YMB, we're all about bringing you important personal finance and career news. We're working on making some changes to our personal finance content, and we want to hear from you. Our question today is, what would you like more of on the show? Financial advisors, WSJ reporters' analysis, stories from everyday investors, or how to make extra money?

If you're listening on Spotify, look for our poll under the episode description, or you can send us an email to ymb at wsj.com. That's ymb at wsj.com. Now onto the show. Here's your money briefing for Wednesday, April 9th. I'm Mariana Aspuru for the Wall Street Journal. Many Americans already had a tough time affording a car. But now, auto tariffs have put prospective buyers in a pickle.

Should I buy a car now, or wait it out? We don't truly know what's ahead, and it's just kind of hard to plan for what might happen to car prices and tariffs in general. But delaying on something that you already know you might need could lead to some regret later. Today, we'll chat with WSJ reporter, Joe Pinsker, about what you need to know. Stick around after the break. With the Fizz loyalty program, you get rewarded just for having a mobile plan.

You know, for texting and stuff. And if you're not getting rewards like extra data and dollars off with your mobile plan, you're not with Fizz. Switch today. Conditions apply. Details at fizz.ca. Auto tariffs by the Trump administration are set to hit already high car prices. But this is very exciting to me. This is the automobile industry and this will continue to spur growth like you haven't seen before.

WSJ reporter Joe Pinsker joins me to talk about it. Joe, it's tough to keep up with where we're at in this trade war, but as of now, a 25% tariff on foreign-made vehicles and extensions to cover car parts are set to hit the American economy. How could these tariffs affect buying or owning a car? The main effect is that buying a car stands to get a significant amount more expensive. We're talking about thousands of dollars added to the prices of new cars and potentially used cars as well. It's a little bit harder to tell what will happen in that market because those cars aren't

being tariffed themselves, but demand is expected to go up. It's a little bit harder to tell what will happen in that market And all of this also makes insurers have to pay more money when a car gets damaged and they're paying for repairs, or if the car gets totaled and they have to buy a new one, tariffs are affecting each of those things as well. And this information leaves people at a crossroads, especially if they're in the market for a new car. You have to decide between buying now or trying to wait it out for a few months. You and our other colleague Veronica Dagger spoke to people who are at that crossroads right now.

What did they say? heard was just uncertainty. wherever people come down, I think it just sort of complicates the decision around a pretty big financial choice that a lot of people make when they buy a car. Following this as a reporter has been tough and following it as a consumer has as well. I think there's just a lot unknown. They could be around for a while, they could be around for not that long. We're waiting to see as it develops. In your story, which we've been talking about and listeners can find in our show description, you explain how car prices before these tariffs and before this back and forth have already been high for Americans. How did we get here? New and used cars have gotten just a lot more expensive in the 2020s. There were supply chain issues during the pandemic and particularly a chip shortage

a few years ago led to a lot fewer new cars. Meanwhile, just the costs of, again, owning a car and not just buying years ago led to a lot fewer new cars. Meanwhile, just the costs of, again, owning a car and not just buying one have gone up a lot. Repairs, insurance, both of those things have risen a lot in cost. And those trace back to the rising cost of cars themselves and also the labor that it takes to repair them. Yeah, there's no hard and fast rule here, but one common rule of thumb, it's a bit rough, that gets thrown around is the idea that you shouldn't spend more than 10% of your take home pay on a monthly car loan payment.

And I had been thinking about that rule and was wondering how it matched up with the typical American income. And again, these are kind of rough ballpark calculations, but they still illustrate an important fact about where things stand with affordability for driving. And if you sort of match up the typical used car loan payment with the typical American income, you're already kind of at that 10% threshold without tariffs. So tariffs would kind of take you beyond that. Meanwhile, for a new car loan payment, you're above 10%.

You're more in the 13 range and you might go as high as 15% after tariffs. This complicates the decision for any buyers who've been waiting for car prices to drop, right? Totally. And as I've written about in the past and in other stories, people are just holding onto their cars for longer. They're looking around at what's happening with car prices and they're saying, you know what, I'm just going to squeeze a little bit more life out of my old thing

and see how long it can last. Looking ahead, timing is on a lot of people's minds. How long could it take for tariffs to hit the auto industry? Timing is on a lot of people's minds. immediately because there's some inventory to work through. the car world this week. And what I'm hearing from them is that if you know that you need to buy a car in the near future, their advice is really to buy it soon. We don't truly know what's ahead. And it's just kind of hard to plan for what might happen to car prices and tariffs in general, but delaying on something that you already know you might need could

lead to some regret later. Of course, at the same time, don't rush a decision if you aren't ready to buy a car. But if you kind of already have your mind made up, it seems like a good time to act. That's WSJ Reporter Jo Pinsker. And that's it for your money briefing. This episode was produced by me with supervising producer Melanie Roy. I'm Arianna Aspuru for The Wall Street Journal. Thanks for listening and we'll see you tomorrow.