Americans rush to buy cars ahead of Trump’s auto tariffs

Auto dealers report soaring sales as buyers fear tariff-driven price hikes, but financial risks loom.

A Ford Mustang is displayed at a used car dealership in Montebello, California, on May 5, 2025. Photo by Frederic J. Brown/AFP

By Anna Fadiah and Hayu Andini

Bliss Bednar never expected to buy a new car this year. Her 2023 Volkswagen Atlas was running smoothly, and with home renovations planned, the retired teacher in central Texas had every reason to keep her vehicle. But when President Donald Trump announced 25% tariffs on imported cars, Bednar joined a growing wave of Americans flocking to dealerships in anticipation of a major price surge.

“I was a little reluctant, because there was nothing wrong with the car I had,” said Bednar, 58. Still, she traded in her VW and put down $20,000 on a 2025 BMW X3, bringing her total purchase to $65,000 with monthly payments of $500. While affordable for now, Bednar admits she's worried about whether she acted too quickly. “I was afraid of tariffs, and I was afraid prices were going to skyrocket. Then I was like, ‘Maybe I jumped on this too soon.’”

Trump’s new auto tariffs, which took effect on April 3 for imported finished vehicles, are already reshaping consumer behavior, though the full pricing impact will take time to reach dealer lots. Financial advisors across the country report a spike in calls from clients seeking to buy cars before costs rise. Although the administration introduced provisions to prevent compounding levies, buyers are still locking themselves into years of car payments—often under duress.

Auto sales surge as consumers fear looming costs

Automakers and dealers have capitalized on the fear of Trump’s auto tariffs, promoting time-sensitive deals and warning buyers to act before inventories dwindle. Sales figures in March reveal the result: Honda’s U.S. sales rose by 13%, while Nissan recorded a 10% jump. The annualized selling rate hit 17.8 million in March and 17.3 million in April, compared to 16 million new cars sold in 2024.

This surge reflects a classic case of fear-of-missing-out, or FOMO, driven by uncertainty around the Trump auto tariffs. Michael Girard, senior director for asset-backed securities at Fitch Ratings, says that while buying ahead of a price increase can be a sound financial decision for stable households, there’s a significant risk for others.

“The high cost of vehicles, combined with the urgency to act before tariffs, creates a perfect storm,” Girard warns. “If the economy slows down, many of these rushed purchases could turn into long-term financial burdens.”

Loan terms lengthen as affordability slips

One of the clearest signs of financial pressure is the shift toward longer loan terms. According to Edmunds.com, one in five new-car buyers is now signing up for seven-year loans. This extended financing trend often leaves buyers “underwater,” owing more than their car is worth. Negative equity now affects 25% of all trade-ins.

“You don’t want to be stuck with a seven- or eight-year loan that you absolutely hate and can’t afford in a couple of years,” said Edmunds analyst Joseph Yoon. “It’s going to be an expensive and painful mistake.”

Auto loan delinquencies have already begun to rise. In 2024, car repossessions hit 2.7 million—nearly twice the level seen in 2021, according to the Recovery Database Network. Despite the average new-car interest rate exceeding 9%, lenders are still extending more credit to subprime borrowers, a troubling trend observed by Cox Automotive.

Tariff anxiety leads to tough choices

Jackie Erker, a 26-year-old freelance designer near Chicago, recently bought a used 2023 Hyundai Palisade for about $40,000. Though her previous vehicle—a 2007 Jeep Patriot—was fully paid off, rising repair costs made her wary of keeping it. “A new car wasn’t in the cards,” she said, “but it felt like I didn’t have a choice.”

Now, Erker faces $525 monthly payments and has had to adjust her lifestyle. She and her partner are buying generic brands and sharing bulk groceries with family to cut costs. “We’ve had to make cuts in other areas,” she said.

Financial advisers like Brittany Wolff in Greenville, South Carolina, are urging clients not to panic. If a new car wasn’t already on the radar, she argues, there’s little reason to rush now. “Households should spend no more than 10% of take-home pay on car payments,” she advises.

Shane Sideris, a partner at Synchronous Wealth Advisors in Santa Barbara, California, is reminding clients that a car is not an investment. “Even if they can technically afford the monthly payment, it may come at the expense of retirement contributions or debt reduction,” he said.

Dealers use fear to drive urgency

Dealerships are fueling the panic. “Get it before it gets worse” is becoming a common sales pitch, says Jonathan Smoke, chief economist at Cox.

This pressure has turned the car market into a race against time. Even those who buy now may find themselves burdened later, as long-term payments collide with shifting personal finances or economic downturns.

For buyers who had already planned for a vehicle upgrade, the timing might work out. But others risk damage to their credit and the possibility of losing their only form of transportation. Though auto loans are often prioritized by consumers to avoid repossession, delinquencies are climbing.

Repo industry braces for a spike

The auto repossession industry is already preparing for an uptick. Vaughn Clemmons, president of the American Recovery Association, says his organization expects a sharp increase in 2025.

“Repossessions are definitely on a trajectory up,” Clemmons stated. “The cost to survive is skyrocketing, and the consumer is going to feel it.”

As Trump’s auto tariffs begin to take hold, the U.S. car market is being reshaped—not just by policy, but by consumer psychology. The fear of missing out on a deal has triggered a buying frenzy. But in the months ahead, Americans may be forced to confront the real cost of rushing into expensive decisions based on uncertainty.

For those like Bliss Bednar and Jackie Erker, the consequences will unfold over time, as car payments, interest rates, and economic conditions dictate whether their choices bring relief or regret.