Trump auto tariffs start Thursday. What does this mean for Long Island consumers?

A new tariff on foreign-made vehicles set to go into effect Thursday could hit Long Island drivers in their wallets, but experts say consumers looking to buy or trade in a new car should exercise due diligence to help mitigate costs.

The Trump administration's plans to start collecting a 25% tariff on vehicles is part of a broader foreign policy centered around what the Trump administration has called “reciprocal” taxes. On Wednesday, President Donald Trump announced a 10% baseline tax on imports from all countries, as well as higher tariff rates for dozens of nations that run trade surpluses with the U.S., The Associated Press reported.

Trump has previously said the tariffs are meant to motivate companies to move manufacturing back to the United States and negotiate better trading terms with other countries. But the increased financial pressure on consumers have led many economists to worry about a potential recession.

Auto industry experts say the auto tariffs likely will mean that consumers should expect to pay at least some of the 25% tax on top of their vehicle purchases. The cost of parts also is expected to rise as further tariffs are implemented, making auto insurance and repairs more expensive as well, industry experts said. 

"Long Island is a consumer of cars, not a producer," said Juan Carlos Conesa, professor and co-chair of the economics department at Stony Brook University. "If you want to buy a foreign car produced somewhere else, it's going to become more expensive."

Here are four things to know about auto tariffs and their impact on Long Islanders.

How will auto tariffs affect consumers?

Unless you’re purchasing a car that was entirely built in the United States, expect to see some of that added cost reflected in your next vehicle purchase, said Robert Sinclair, senior manager of public affairs at AAA Northeast.

Some people, as a result, may try to hang onto their vehicles for longer than planned, he said, but there could be a rush on vehicles ahead of the tariffs kicking in. 

The AP has reported that most major car companies reported double-digit sales gains in March, and automakers overall sold nearly 1.6 million vehicles that month, up 13.6%.

"Tariffs usually raise prices on everything," said Joe McCabe, president and CEO of AutoForecast Solutions, a Pennsylvania-based advisory firm.

That includes companies that aren't impacted by tariffs, he said, pointing out that unaffected sellers could use the added expense as an "opportunity to add profitability to their product, as long as they stay under their competitors' pricing." 

Companies, however, are unlikely to pass on the full cost of tariffs onto cost-conscious or entry-level buyers looking at vehicles under $35,000, he added, because it could push that demographic to the used-car market or to look at options from competitors. 

The Yale Budget Lab estimated that the 25% auto tariff will cause motor vehicle prices to rise, on average, around 13.5%. On the average new car in 2024, that comes out to an additional $6,400.

The uncertainty surrounding foreign trade policy is also "damaging from a macroeconomic perspective," Conesa said, pointing out that it triggers businesses to withhold investments. 

"It's having enormous consequences for the stock market, because the stock market is just the best measure of investors about what the profits of U.S. companies are going to be in the future," he added. 

Engaging in a global trade war could ultimately result in a global recession, Conesa said. 

What happens when tariffs on vehicle parts roll out?

Prepare for things to get even more complicated, experts say.

Even among cars built in the United States, many models use parts made overseas, Sinclair said. Higher costs for parts will likely also show up in more expensive repairs and auto insurance.

“The administration has talked about the fact that it would prompt manufacturers to build parts here, but it takes two, three, four years to build a factory to assemble motor vehicles,” he said.

This could also mean portions of vehicles built in the United States, but importing parts from other countries, could be more expensive, McCabe said. 

The Center for Strategic and International Studies said in an analysis published Wednesday that the auto tariffs could have "stacking" effects in multiple ways, such as increasing the cost to build even in the U.S. because of tariffs on parts like engines and transmissions. 

"The final product might come out of a plant in Kentucky, but the parts in that car have crossed borders several times," Conesa said. "What that means is, not only are foreign cars going to be more expensive, but also domestic cars are going to be more expensive as well."

How will auto tariffs impact insurance?

A recent survey from The Zebra, an insurance comparison company, found that most drivers didn't realize that auto tariffs could impact their insurance rates.

Unfortunately, that's far from the truth, said David Seider, chief commercial officer at The Zebra. 

"Your auto insurance premiums go up whenever it costs more to repair or replace your vehicle," he said. 

As the cost for vehicles and repairs go up, so will auto insurance premiums, he said.

It's too soon to tell how much rates will go up, Seider said, but recent estimates project between an eight and 10% increase. That translates to hundreds of dollars for drivers, especially in New York, which saw auto insurance go up 50% between 2023 and 2024.

The rise in auto insurance will also likely cause an increase in un- and under-insured drivers, potentially driving rates up even higher to compensate, Seider said. 

What advice do experts have for consumers?

Do your research. The final country of assembly for new vehicles will significantly impact affordability, Sinclair said.

Many foreign-branded vehicles — such as Toyota, BMW and Honda, among others — are actually built in the U.S., according to Sinclair. But, likewise, many American-made cars are built with parts shipped from overseas, he said.

One way to check where cars are built is through data maintained by the National Highway Safety Administration, which has published lists of vehicles and their final assembly country, Sinclair said.

McCabe similarly advised consumers to scrutinize vehicles, just as they would without tariffs. 

"Walk in with your eyes wide open. Don't necessarily work with the first dealership," he said. "Do your due diligence, because the same level of competition is going to exist."

When it comes to auto insurance, Seider advised drivers to shop around for lower rates and consider insurance programs that track mileage and driving in exchange for discounts.

"A licensed insurance agent comparison site can help you figure out which discounts apply to you," he said. 

By Brianne Ledda

brianne.ledda@newsday.com@brianne_ledda

Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.