MILWAUKEE — The Trump administration is proposing a 25% tariff on imported vehicles and vehicle parts from Canada and Mexico, effective as soon as Feb. 1.
The president says the move would help save the American auto industry.
Many dealers expect the tariffs to drive up prices almost immediately, and others warn they could also slow down production at factories.
"They will have a huge impact," said Jim Tolken, president of the Auto Dealers Association of Metro Milwaukee (ADAMM). "If there are tariffs upwards of 25%, that could add $5,000 to $8,000 to the price of a new vehicle."
Many cars, both American and foreign brands, are made in Canada and Mexico, and their parts are manufactured there.
"[The tariffs] effectively increase the cost to manufacture the car and to retail the car."
Watch: Trump tariffs on track to raise the cost of cars, local auto industry reps react
As of January 2025, the average transaction price for new cars is just under $50,000, according to Tolken.
New tariffs would raise that average price to upwards of $55,000.
"As the price of new cars goes up, more and more people will opt for a used car, and the market price for those used cars will also increase," Tolken explained.
Peter Bilgo, whose family has operated Milwaukee's Riverside Automotive Service since 1924, said a rise in tariffs will likely bring more customers to their shop.
"Tariffs will take the price of a used car up over $25,000," said Bilgo. "If people hang on to their old cars longer, we’re going to be busier because, obviously, cars break down, and we wouldn’t be in business if they didn’t."
Bilgo reiterated that if the cost of parts goes up, so does the price for repairs.
"Those parts get passed down to us as a repair shop, then to the consumer, because our prices are based upon our cost."
It’s unclear if the tariffs will actually be imposed on Feb. 1.
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