U.S. tariffs on steel and aluminum have added hundreds, and by some estimates well over a thousand dollars, to the sticker price of a new car since 2018. Yet the Bureau of Labor Statistics Consumer Price Index for new vehicles shows that prices have actually declined on a year-over-year basis in recent readings. That creates a paradox and suggests global supply chains can absorb and redirect protectionist costs in ways policymakers did not anticipate.
How Steel and Aluminum Duties Raised Car Costs
The tariff story starts with Section 232 actions first imposed in 2018, which set duties at 25% on steel and 10% on aluminum imports. A June 2025 White House proclamation adjusting those duties references the original 2018 proclamations and their subsequent amendments, confirming that these levies remain active policy tools years later. U.S. Customs and Border Protection applies the duties to specific Harmonized Tariff Schedule codes, including Chapter 98 provisions that determine what crosses the border duty-free and what does not. For automakers that rely on imported metals for body panels, frames, and engine components, the math hits hard at the factory gate, even if sticker prices do not rise in lockstep.
Economists have measured just how much of that cost reaches buyers. Research by Mary Amiti, Stephen Redding, and David Weinstein, hosted at Princeton University, computed tariff-inclusive import prices using customs unit values and duty rates, finding that the 2018 trade war duties passed through almost entirely to domestic prices. Per the National Bureau of Economic Research version of that paper, the estimated hit to U.S. real income reached $1.4 billion per month by the end of 2018. An independent IMF working paper reached a similar conclusion: tariff incidence fell largely on the U.S. side, meaning foreign exporters did not cut their prices to offset the duties. American importers, and ultimately American consumers, absorbed the blow, even as new-vehicle inflation later cooled in the CPI data.
Why Estimates of the Per-Vehicle Hit Vary Widely
Pinning down a single dollar figure for tariff costs per car is harder than it sounds, because different models use different assumptions about scope and pass-through rates. Per The Budget Lab at Yale, a broader 25% auto tariff would raise motor vehicle prices by an estimated 13.5% on average, equivalent to roughly $6,400 on the average new 2024 car in their baseline scenario. That figure captures a wider tariff regime than the steel and aluminum duties alone. By contrast, consulting firm AlixPartners estimated that existing tariffs add about $1,760 per car, a figure Bloomberg framed as nearly $2,000 per vehicle, with an expected pass-through rate of 80%. The gap between the NBER finding of complete pass-through and AlixPartners’ 80% figure reflects a real analytical disagreement: academic trade models tend to capture border-level price changes, while industry consultants factor in automaker decisions to absorb some cost through thinner margins or production shifts.
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*This article was researched with the help of AI, with human editors creating the final content.
Grant Mercer covers market dynamics, business trends, and the economic forces driving growth across industries. His analysis connects macro movements with real-world implications for investors, entrepreneurs, and professionals. Through his work at The Daily Overview, Grant helps readers understand how markets function and where opportunities may emerge.
