Experts Dispute Claims That Trump Policies Lower New Car Prices
Average transaction prices for new vehicles climbed to $49,105 in October 2025, marking a 3.1 percent increase from the prior year despite assertions from Republican figures that tariffs have driven costs down for American buyers. Data from Edmunds reveals a slight month-over-month dip of 0.2 percent from September’s $49,206, yet year-to-date trends show steady rises fueled by demand for trucks and SUVs. Industry analysts attribute the uptick to persistent high interest rates and economic pressures, with 20 percent of monthly payments now exceeding $1,000 and loan terms stretching beyond seven years for over 20 percent of buyers.
Sen. Bernie Moreno claimed during a recent Senate hearing that car prices have fallen under the current administration, citing a shift from 51 percent U.S.-made vehicles at the year’s start to 57 percent last month. This purported boost in domestic production stems from a 25 percent tariff on imported cars and parts enacted in March 2025, intended to spur local manufacturing. However, experts like Sam Abuelsamid of Telemetry counter that the increase reflects automakers’ production strategies rather than new factory builds, noting, “It’s mostly down to an increase in large truck and SUV sales, which were juiced by incentives.”
Used car prices mirror the trend, with three-year-old models averaging $30,000, up from previous quarters as consumers delay purchases amid affordability strains. Erin Keating of Cox Automotive reports U.S.-assembled vehicle listings rose from about 50 percent before late March to 53 percent post-tariff, but emphasizes this adjustment responds to market dynamics, not expanded infrastructure. Tactical discounting may emerge in December and January, yet forecasts predict slowing sales through 2026 as buyers retain vehicles longer or pivot to older used options.
The tariff’s impact extends to electric vehicles, where Ford, General Motors, Hyundai, Kia, Volkswagen, and Tesla’s ‘Model 3’ and ‘Model Y’ captured over 90 percent of qualifying sales under the now-expired federal tax credit. Without that incentive, EV affordability worsens, contributing to broader payment fatigue. Abuelsamid highlights that brands like these dominated the market through targeted rebates, but rising base prices erode those gains.
For U.S. consumers, the data underscores a disconnect between policy rhetoric and marketplace reality, with inventory improvements and returning incentives offering only marginal relief. Cox Automotive projects continued modest price growth into next year, barring a Federal Reserve rate cut. Automakers face pressure to balance profitability against volume, as high-floor transactions deter entry-level buyers. The scenario leaves families grappling with elevated costs, prompting shifts toward certified pre-owned segments where depreciation once provided bargains.
