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Key Takeaways

• U.S. drivers will feel the impact of Trump's auto tariffs in their pocketbooks over the coming years, according to several analyses.

• Prices for imported cars could rise as much as $15,000 for a $60,000 car, while domestically made cars could go up $3,000 to $8,000 depending on how many foreign parts they incorporate.
  

• The White House says tariffs will bring manufacturing and jobs back to the U.S., but economists worry that the tariffs will cause inflation to reignite and hinder economic growth.
  

President Donald Trump's latest round of tariffs targeting the auto sector will likely push up the cost of living and could keep inflation pressures high at least through this year.

According to several analyses, consumers will feel the pain of Donald Trump's 25% tariffs on imported cars announced Wednesday. If dealerships pass on the full costs to consumers, that would mean an additional $5,000 to $15,000 on imported cars ranging in price from $20,000 to $60,000, Goldman Sachs found.

Domestically made cars could see price increases, too, because many are made with foreign parts, which are also subject to the tariff. Economists at Goldman Sachs estimated that U.S.-made cars could see price tags go up $3,000 to $8,000. Typical prices will rise $7,600 for imported vehicles or $3,800 across all cars, economists at Jefferies estimated in a commentary.

The reports illustrate the growing concerns that analysts and investors have about the potential impact of Trump's trade policies. While the White House says the tariffs will put the U.S. on a more-level playing field with trading partners around the world, and bring manufacturing and jobs back to the U.S., economists worry that the tariffs will stoke inflation in the near term and hinder economic growth.

According to economists at Wells Fargo, the new auto tariffs, on top of previously announced levies on aluminum and steel, as well as tariffs against Canada and Mexico, put upward pressure on overall inflation. Wells Fargo estimates the tariffs would add 0.4 percentage point to the yearly inflation rate as measured by Personal Consumption Expenditures, putting "core" PCE on track to increase 2.8% over the year, up from its 2.6% annual increase in January.

The announced tariffs on the auto industry were so high that analysts at Wedbush had a hard time taking them at face value, especially considering Trump's recent history of walking back major tariff policies shortly after announcing them.

"We continue to believe this is some form of negotiation, and these tariffs could change by the week, although this initial 25% tariff on autos from outside the U.S. is almost an untenable head-scratching number for the U.S. consumer," Daniel Ives, senior equities research analyst at Wedbush, wrote in a note to clients. "Investors will be frustrated by this announcement with few details... as this tariff announcement/25% number is hard to digest."