When President Donald Trump imposed tariffs on imported vehicles and parts in April 2025, all the 'experts' confidently predicted a grim outcome: car prices would soar by an average of $2,000, with budget models like the Hyundai Elantra hit hardest. Economists warned of rampant inflation and a crippled auto market. Yet, months later, the doomsayers have been proven wrong. Not only have car prices not skyrocketed, but automakers like Hyundai, Ford, Lincoln, General Motors (GM), and Lexus are slashing prices and rolling out 0% interest rate deals with extended loan terms to lure buyers.
Far from the predicted price surge, the auto market is seeing a surprising trend of affordability. A rush to buy before tariffs took effect flooded dealerships with inventory, but by June 2025, demand tapered off, leaving brands like Ford with over 60 days’ worth of unsold vehicles. To clear lots, automakers are absorbing tariff costs and doubling down on incentives. Hyundai, for example, has frozen 2025 model prices and paired them with 0% APR deals through year-end, while ramping up U.S. production of models like the Tucson to skirt tariffs. Ford and Lincoln are offering 0% financing on the Bronco Sport, Maverick, Mustang Mach-E, and Lincoln Nautilus for orders placed by July 6, alongside price cuts to move existing stock. GM has followed suit, pairing 0% APR with discounts on high-demand vehicles like the Chevrolet Trax and boosting output of tariff-exempt, U.S.-made pickups. Lexus has also jumped in, offering 0% financing on select 2025 models to stay competitive.
These moves show automakers prioritizing sales volume over short-term profits, directly contradicting the experts’ dire forecasts. Extended loan terms—some stretching to 84 months—further ease the financial burden for buyers, effectively lowering monthly costs. Data from Kelley Blue Book indicates average new car prices have dipped slightly since April, with incentives driving effective costs even lower. While experts warned of a tariff-fueled price spiral, the reality is clear: automakers are adapting, prices are stable or dropping, and deals are abundant.