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Trump's auto tariffs going to effect April 3rd, that means prices for vehicles are expected to rise, even consumers look into the used car market for relief could be out of luck. Edmund's head of insights, Jessica Caldwell, joins us now to discuss. Jessica, it is great to see you. So with these tariffs, Jessica, you know, we know what Trump is trying to achieve here, wants to encourage more domestic manufacturing, but that's a long-term goal. In the near term, we could see some ripple effects. One would be these these automakers, Jessica, likely are now going to have to deal with higher costs, right? I'm curious how do you think they're going to deal with those higher costs? Are they going to take the margin hit, are they going to pass those along to Jessica and Josh? What do you think?

Yeah, well, given that they're 25%, no automaker can absorb 25% of costs. The margins are just not that great in the auto industry. So some of it is going to be passed along to the consumer. That is the $25,000 question because we don't know exactly how much. I wouldn't say, if you look at a vehicle, see where it's made and then apply those tariffs to it. I don't think that really is going to happen. I think automakers will probably look at the entire lineup of vehicles that they sell and see where costs can be mitigated, see where it's going to cause the least amount of damage for their sales, to their consumers, or maybe people can take a little bit more of a price hike. Someone buying a $100,000 car is probably not as price sensitive as someone buying a $20,000 car. Um so it's going to be probably not particularly straightforward, but we do know prices are going to go up.

So they are going to rise, Jessica, but your point is it's hard at this point to quantify how much?

Yeah, I think so, just because there's a lot of moving parts here and I don't think that it's going to be a this vehicle has gone up, this vehicles tariff by this much, so the price is going to be go up by this much as well, because I think firstly automakers will get rid of incentives. Uh they're probably not going to have incentives of vehicles that they have to raise prices. They will probably absorb some of the cost themselves, see how much they can take, and then thirdly, then start to raise prices for these vehicles. And I imagine it's going to look different for every brand and for every vehicle.

So Jessica, given that, I'm just curious how how do you think consumers are going to react and respond then? Do you think they listen, do they keep buying new cars or no? Do they look to the to the used car market? What do you think?

Well, at the end of the day, people need cars in this country to get from point A to point B. So we have may be have to see people sit out of the market, but obviously what we have seen in the past few years is that consumers have been pushed to the brink of affordability. New vehicle transaction prices have gone up 29% in the past five years. And then you think about adding additional tariff costs to that, people are going to just face complete sticker shock. Um you know, they're not buying cars every month. They come into the dealership once every six years and look at these prices. So that's an extreme cost um of what we'll see the what we see people doing. So I think that to skirt the this tariff issue, people will start to look towards the used car market if they need to buy a vehicle. And just like we saw in the semiconductor shortage a few years ago, when people start shifting to use, then those prices go up as well. So there's not going to be a lot of relief here if people want to buy a vehicle in general.

And even if they want a used car, Jessica, let's say that's where that's where they want to go. What what are inventories like right now?

Well, used car inventories are are tough. I mean, what we're seeing, you know, right now is we're not going to see a lot of lease returns come back in 2025. 2022 was a pretty low year for leasing for for leasing in general. So the used car inventory, um if we just look at that inventory is not exactly at the best point ever to absorb all of these new customers. So the prices may be uh just higher from that already.

Do you think final question, Jessica, we could see more Americans just spend more repairing the cars they already have? I was talking to a financial analyst earlier in the show who thought in his opinion, that that's a trend to watch.

Yeah, I mean I think that is definitely going to happen. I mean, obviously we're going to see costs go up on parts as well because of the tariffs, but I think people will start to think, let me see how much this vehicle I'm going to keep um is going to be cost to repair rather than go out and buy a new one because if you buy a new one, you're not only dealing with higher prices, you're dealing with higher interest rates as well. And then also insurance costs. I mean insurance cost will probably go up because of uh you know, parts and aluminum steel tariffs and will it cost more to insure new car versus the used car that I already have. So it's not just here about buying a new vehicle with these tariffs. It really is about total cost of ownership.

All right, next week it could get busy. Jessica, thank you so much for your time today. Appreciate it.

Sure, thank you.