J.D. Tuccille: Trump’s auto tariffs are soaking American buyers, and it is getting worse

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The loss of the few remaining inexpensive cars would be a hard blow to already battered American consumers. As the Journal’s Terlep and Bade point out, the average price of a new car in the U.S. is right around US$50,000, but affordable models made wholly or in part overseas come in at roughly half of that amount. The availability of such cars provides a bit of relief in a market that has pushed households to take on crushing debt.

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According to a new study from The Century Foundation, “At the end of 2025, the average origination balance for an auto loan reached US$33,519, an amount US$10,000 higher than the average in 2018, due to massive increases in the price of even the most basic cars and a shortage of ‘affordable’ car models.” Even allowing for inflation during that period, this represents an increase in the amount borrowed.

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With balances so high, borrowers are turning to extended-length auto loans (seven years or longer) to keep payments down, though they still average 20 per cent of borrowers’ monthly income. That translates into more money paid out over time to lenders to cover the costs of cars and trucks that will hopefully last the lifetime of the loan.

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And yes, tariffs represent a significant share of increased costs, especially on less expensive car models. According to Kelley Blue Book, the go-to source for vehicle valuations, the Trump administration’s duties “increase car prices by as much as US$6,000 on vehicles priced under US$40,000.”

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There is a big beneficiary of U.S. automobile tariffs, though. High import duties have induced automakers to shift manufacturing capacity to the United States, leaving a vacuum to be filled by Chinese companies like BYD, Chery, and Great Wall. “As U.S. automakers pull investments from Canada, the United States’ northern neighbour is saying welcome to Chinese competitors,” The Detroit News reported in January.

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The entry of Chinese companies to Canada was actively courted by the Carney government, which replaced a 100 percent surtax on Chinese-made electric vehicles with a quota system. The move has proven controversial from economic, national security, and human rights perspectives given China’s track record. Sarah Goldfeder, executive director of government relations and corporate affairs at General Motors Canada, told the House of Commons Standing Committee on Science and Research that “Unfettered access, even if limited by quotas, will weaken Canada’s ability to protect its people, its national interest and its automotive industrial and technology base.”

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But the opening of the Canadian market to Chinese manufacturers was inevitable amidst trade war tensions with the nationalist Trump administration. It’s a positive move for Canadian consumers, too, who will see increased competition among automobile makers.

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And that’s the ultimate irony of the Trump administration’s tariffs. Intended to boost America’s economic prospects, trade barriers are raising costs for American consumers, restricting choices available in the marketplace, angering the U.S.’s trade partners, and expanding opportunities for companies based in China, which Trump sees — accurately — as a serious and hostile rival power.

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Protectionism isn’t helping the U.S.; it’s making Americans poorer and more isolated.

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National Post

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