The Supreme Court’s tariff ruling won’t bring car prices back down to earth

It never happened Buying a new car was more expensive. The average transaction price last month for U.S. buyers was $48,576, up nearly a third from 2019, according to Edmunds. The “affordable” car worth $20,000 or less is dead.

The high prices have been linked to a lot of economic dynamics: lingering supply chain issues in the pandemic era, the introduction of expensive technology into everyday cars, rising labor and raw material costs, and new tariffs imposed by the Trump administration that have affected steel, aluminum and the cars themselves.

Now, despite a US Supreme Court ruling striking down some of Trump’s tariffs, car buyers likely won’t get any relief.

“The fundamental cost structure facing the auto industry did not fundamentally change overnight,” Jessica Caldwell, Edmunds’ head of insights, wrote in an emailed statement. To put it more simply: cheap cars won’t come, at least not because of this ruling.

The Supreme Court’s decision impedes the President’s authority to use the International Emergency Economic Energy Act to impose tariffs in response to emergencies. Trump used this power to impose tariffs on countries around the world, with the emergency being a “large and persistent” trade deficit. The administration imposed other new tariffs on Canada, China and Mexico due to what it described as emergencies related to the flow of migrants and drugs into the United States.

But most of the definitions that affect the auto industry come from another law, Section 232 of the Trade Expansion Act. This requirement may apply to imports that “threaten to weaken” the country’s national security. Tariffs on steel, aluminum and copper – the main raw materials for cars – and auto parts and imported vehicles themselves fall under this heading and remain in effect. This includes a 15% tariff on cars manufactured in Europe, Japan and South Korea.

Caldwell says automakers have already done a good job of protecting consumers from the effects of tariffs. Even as retailers blame tariffs for the steadily rising prices of consumer goods such as electronics and appliances, car prices have risen just 1 percent since this time last year, company data show. But as the tariff regime continues, that could change in ways that make new car buyers less happy.

“If cost pressures continue to increase, automakers may have less room to protect shoppers from higher prices, but for now, the broader market impact remains,” Caldwell says.