Auto tariffs announced by President Donald Trump will likely raise car prices by thousands of dollars days after the policy takes effect, while hiking costs for repairs and insurance, some experts told ABC News.
Within hours of the policy rollout, Ferrari said it will raise prices by as much as 10% for some models to compensate for the tariffs.
The 25% tariffs, set to take effect next week, will apply to imported passenger vehicles, including cars, SUVs, minivans, cargo vans and light trucks, according to a White House statement released after Trump's Oval Office remarks on Wednesday.
The tariffs will also apply to key imported auto parts, including engines, powertrain parts and electrical components.
"I have talked to consumers who say, 'Well, I'm not buying a car, so it doesn't really matter.' Well, think again," Jessica Caldwell, head of insights at Edmunds, told ABC News. "This is really all encompassing."
In a statement on Wednesday, the White House touted the tariffs as a means of safeguarding U.S. national security and economic strength.
"President Trump is taking action to protect America's automobile industry, which is vital to national security and has been undermined by excessive imports threatening America's domestic industrial base and supply chains," the White House said.
The tariffs will almost certainly raise foreign-made car prices, experts said, since importers typically pass along a share of the tax burden to consumers in the form of extra costs.
Last year, U.S. shoppers bought approximately 16 million cars, SUVs, and light trucks, half of which were imported, the White House said.
The other half of the auto sector – made up of U.S.-made cars – will also undergo significant price hikes since manufacturers will face higher costs for imported parts and face an uptick in demand as buyers seek out domestic alternatives, experts said.
"The question is: What will happen to all the cars made here in the U.S?" Christopher Conlon, a professor of economics at New York University who studies trade, told ABC News.
"Competing vehicles will be much, much, much more expensive. We'll see some substitution for U.S. models, and I'd expect those prices to go up significantly," Conlon added.
Dan Ives, managing director of equity research at the investment firm Wedbush, predicted general tariff-related price increases for U.S. buyers between $5,000 and $10,000 per vehicle.
The added costs could reach as high as $20,000 per vehicle, Art Wheaton, director of labor studies at Cornell's School of Industrial and Labor Relations, who studies the auto industry, told ABC News in a statement.
The sticker shock for new cars will send many buyers into the market for used cars, sending prices higher for pre-owned vehicles, experts said.
"The market will get very competitive for used-car buyers," Conlon said. "I expect those prices to go up."
The tariffs on auto parts are also likely to raise the price for car repairs, since auto shops may pass along the added costs to customers, experts said. In turn, they add, insurance costs will likely rise to account for additional expenses in the event of an accident.
"If you get into an accident that requires a lot of parts, it's going to probably cause those costs to rise," Caldwell said.
Prices of new cars could rise within days of the onset of tariffs on April 3, some experts said.
Some firms may raise prices for inventory already in the U.S., even though those cars were not subject to the tariffs, since the expectation of higher costs could drive up prices, Thomas Hoenig, senior fellow at the Mercatus Center at George Mason University and former president at the Federal Reserve Bank of Kansas City, told ABC News.
"Some sellers will raise prices in anticipation of the tariffs," Hoenig said.
Some experts disagreed, saying the price increases could take weeks or the timing remains unknown.
"It's going to take a while for automakers to figure everything out," Caldwell said, forecasting that the price hikes would take hold "fairly soon."
The U.S. auto sector relies on a supply chain intricately intertwined with Mexico and Canada.
Mexico and Canada make up the top two U.S. trading partners for both finished motor vehicles and car parts, according to an analysis of data from the U.S. International Trade Commission by Cato Institute, a right-leaning think tank.
The auto tariffs ease the tax burden slapped on vehicles covered by a free trade agreement between the U.S. and Canada known as the United States-Mexico-Canada Agreement, or USMCA. For such cars, the tariffs will only apply to the value of their non-U.S. content, the White House said.
Car parts covered by the USMCA, meanwhile, will remain tariff-free until the Trump administration establishes a process for evaluating the value of their non-U.S. content, the White House added.
The easing of tariffs for vehicles covered by the USMCA could slow initial price increases, Hoenig said.