Trump administration tariffs will cost the US auto industry $100 billion per year, according to Cox Automotive Chief Economist Jonathan Smoke. And record US electric vehicle sales of 410,000 in the third quarter, up 22% year-over-year to 10% market share, will soon fade after the EV tax credit goes away after the 2026 fiscal year begins October 1 (you still have time to sign a deal and make a downpayment by then).
But the worst effects of the Trump administration’s auto industry policies are easily being absorbed by the automakers, which will benefit from deregulation, and by affluent buyers, who will benefit from lower interest rates and tax cuts from the One Big Beautiful tax and spending bill.
“It’s not so bad,” Chief Economist Jonathan Smoke said of the consumer and industry outlook in Cox Auto’s Q3 2025 Industry Insights and Sales Forecast.
The forecast expects a 4% to 8% price increase for all vehicles, new and used, because of the Trump administration’s tariffs on cars and trucks assembled outside the US, as well as on parts imported for US-assembled vehicles.
According to Cox, the average tariff cost increase for all imported vehicles is $5,500. It’s $4,900 for all vehicles imported from Canada and Mexico. The average cost of US-assembled vehicles is up $1,000 from tariffs on imported parts, not including steel and aluminum.
While these tariff impacts are settled, the Trump administration still has renegotiation in its future with Mexico and Canada over the USMCA that replaced the North American Free Trade Agreement by the end of the first Trump administration. Another tariff wild card comes with the US Supreme Court’s November 17 docket, according to Executive Analyst Erin Keating, when the court will hear arguments on whether Trump has legal authority to impose tariffs under the International Emergency Economic Powers Act.
The upshot is that Cox Auto has revised its projection for full-year 2025 sales to an estimated 16.1 million new vehicles, up from its June projection of 15.9 million. Last year, automakers sold 16 million-flat in the US.
Though it’s too early for a full-year 2026 forecast, Smoke expects an auto sales boom next spring when tax refunds hit mailboxes and direct deposit.
