How will tariffs effect the US Auto Parts Market?

Tariffs on auto parts are expected to increase vehicle costs, decrease sales, and create challenges for dealerships and automakers! 

The impact is likely to be broad, affecting new and used car prices, repair costs, and insurance. Some automakers and suppliers may try to absorb the costs, but more likely, they will pass them on to consumers. 

How New Tariffs on Auto Parts Could Reshape the U.S. Automotive Industry

The U.S. automotive industry is bracing for impact as new tariffs on imported vehicles and auto parts are poised to take effect on April 2, 2025. These 25% tariffs could ripple through every corner of the industry—from production lines to showroom floors—and ultimately into the pockets of American consumers.

A Surge in Vehicle Prices

The most immediate and visible effect of the tariffs will be on vehicle prices. With a 25% tariff on imported vehicles and auto parts, consumers can expect to pay significantly more for both new and used cars. Analysts predict the average new car could exceed $50,000, with some models seeing price hikes of $4,000 to $12,000 or more.

Even cars assembled in the U.S. will not be immune. Many American-made vehicles include at least 15% of parts from abroad, meaning their production costs—and therefore retail prices—will climb as well.

Repair Costs on the Rise

It’s not just new car buyers who will feel the pinch. Tariffs on parts will also increase the cost of vehicle repairs. Everything from replacement bumpers to brake pads could become more expensive, putting pressure on consumers, auto shops, and insurance companies alike.

Used Car Prices and Sales Impact

As new car prices rise, consumers will likely shift toward the used car market, increasing demand and pushing up prices. Wholesale values are expected to rise by several percentage points.

Meanwhile, higher prices could trigger a 10% decline in overall U.S. vehicle sales. Some consumers may delay purchasing vehicles or opt for more affordable, feature-limited models. Others may simply hold onto their existing cars for longer.

Challenges for Automakers and Dealerships

Automakers will be caught between rising production costs and price-sensitive consumers. They may have to choose between absorbing the costs, passing them on, or rethinking their sourcing strategies. This could affect innovation, model availability, and competitiveness.

Manufacturers may also eliminate low-margin models—especially affordable imports and entry-level options—to maintain profitability. The net effect could be fewer choices for buyers, especially those shopping on a budget.

Supply Chain Disruptions

The global automotive supply chain is intricate and deeply interconnected. A single vehicle may include parts sourced from dozens of countries, with components crossing borders multiple times before final assembly. Tariffs will add costs and logistical headaches at every turn, potentially delaying production and raising costs even further.

Domestic Manufacturers Not in the Clear

Contrary to the belief that tariffs will exclusively benefit domestic manufacturers, these companies could also suffer. If they rely on global supply chains, they will face the same cost pressures. Meanwhile, foreign automakers operating in countries unaffected by U.S. tariffs may become more competitive in global markets, potentially squeezing U.S. parts makers.

Retaliatory Measures Could Backfire

If the U.S. imposes these tariffs, trading partners may respond with retaliatory tariffs on American exports. This could hurt other U.S. industries—like agriculture, aviation, and manufacturing—creating further economic instability and shrinking foreign markets for U.S. goods.

The Electric Vehicle Sector: A Unique Challenge

Electric vehicles (EVs) may be particularly hard-hit. Many EVs and their batteries rely on globally sourced materials—such as graphite from China—that could be targeted by the tariffs. This may raise production costs and slow adoption rates, even in the face of federal incentives.

Broader Economic Consequences

The potential economic fallout isn’t limited to the auto industry. Higher vehicle prices could contribute to overall inflation, squeezing consumer budgets and reducing spending in other areas. Economic growth projections have already been revised downward in anticipation of these changes.

The job market also faces uncertainty. While proponents argue tariffs may bring back U.S. manufacturing jobs, critics warn of potential layoffs in industries that rely heavily on imports or face foreign retaliation.

Real-World Examples

• A buyer considering a German-imported sedan may pay 25% more overnight.
• A U.S. automaker that imports engines from Mexico will see a direct increase in production costs, affecting truck prices domestically.
• An EV battery reliant on Chinese components may see its cost skyrocket, weakening the EV sector’s growth.

Tariffs on auto parts and vehicles are set to shake the foundations of the U.S. automotive industry. While the policy aims to boost domestic manufacturing, the short-term consequences may include higher prices, supply chain instability, reduced consumer choice, and economic ripple effects that go far beyond the dealership lot.

For consumers, automakers, and policymakers alike, the next few months will be critical. How each stakeholder responds will shape the future of transportation, manufacturing, and trade in America.

Some consumers may be priced out of the new car market altogether and will have to hold onto their existing vehicles longer or opt for less expensive models.⁶ There might also be a shift towards smaller or less feature-rich vehicles to mitigate the price increases.

The automotive industry relies on complex, globally integrated supply chains. Tariffs will add costs and red tape each time components cross borders, potentially multiple times before final assembly. This could lead to significant disruptions and increased manufacturing expenses.

The U.S. automotive parts market is undergoing a major transformation as the vehicle fleet evolves. 

Building a platform like Cars.com that includes both vehicles and auto parts could be a smart move, especially if tariffs create shortages, price hikes, and increased demand for both new/used vehicles and parts.

This dual-directory approach addresses a real pain point: people struggling to find affordable, available vehicles or replacement parts—both of which may soon be in high demand. Here's how you could set it up:

🔧 How to Build a Directory for Both Cars and Auto Parts

🧩 1. Split the Site into Two Main Categories

Navigation Example:

• Buy a Car
  • New
  • Used
  • Certified Pre-Owned
• Find Auto Parts
  • OEM (Original Equipment Manufacturer)
  • Aftermarket
  • Used/Salvaged
  • By Category (Engine, Transmission, Tires, etc.)

Let users easily toggle between vehicles and parts with filters for both.

🏗️ 2. Database Design

Here’s a simplified view:

Vehicle Listings Table

• Title (Year, Make, Model, Trim)
• VIN (optional for dealers)
• Price
• Mileage
• Condition (New, Used, Salvaged)
• Location (ZIP code)
• Photos
• Seller type (Dealer or Private)
• Contact info

Parts Listings Table

• Title (e.g., "2018 Toyota Camry Alternator")
• Compatible Vehicles (linked to vehicle models)
• Condition (New, Refurbished, Used)
• Part Number (if available)
• Category (Engine, Suspension, Electrical)
• Price
• Inventory (Stock level or availability)
• Location (ZIP for shipping or pickup)
• Seller type (Dealer, Salvage Yard, Retailer)
• Contact info

You could also have a Sellers table to manage all seller profiles, which can list either or both parts and vehicles.

🔍 3. Search and Filter Options

Vehicles:

• Year, Make, Model
• Price Range
• Distance
• Body Style
• Fuel Type, Transmission, etc.

Parts:

• Make/Model Compatibility
• Part Type (Engine, Brake, Suspension, etc.)
• Condition (New/Used)
• Seller Location
• In-stock Only

💰 4. Monetization

• Subscription plans for dealerships, parts suppliers, or junkyards to list inventory
• Pay-per-lead or featured listings
• Ads and affiliate links to parts retailers or service centers
• Marketplace fees (if enabling direct purchases or checkout)

⚙️ 5. Technical Stack Recommendations

• Backend: Django or Laravel (for structured, scalable data relationships)
• Frontend: Tailwind + Alpine.js or React (for filters, interactivity)
• Database: PostgreSQL
• Search Engine: Elasticsearch or Meilisearch (for fast, faceted search)
• Hosting: DigitalOcean, Render, or AWS

Optional integrations:

• VIN Decoder API for auto-filling vehicle details
• eBay/Car-Part.com API (if aggregating inventory)
• Stripe or PayPal for in-site payments

🧠 Bonus Ideas

• Parts Matching Tool: Let users enter their VIN to find compatible parts.
• DIY Guides: Add SEO-rich content for people searching how to fix things.
• Saved Search Alerts: Notify users when the part or car they want becomes available.
• Mechanic Directory: Add trusted repair shops that can install listed parts.

⚠️ Why This Is Timely

• Tariffs could create a shortage of new parts and higher prices for new cars.
• People may repair instead of replacing vehicles, boosting used parts demand.
• Junkyards, small mechanics, and importers will need a place to list parts online—many don’t have their own websites.

Over 260 million vehicles are in operation in the U.S., and the average vehicle age is over 12 years, driving strong demand for replacement parts. At the same time, electric vehicle (EV) sales are rising (nearly 300,000 new EVs in Q1 2025coxautoinc.com), introducing new parts (batteries, motors, chargers) into the market. Industry analysts project robust growth in the aftermarket: one report forecasts the U.S. aftermarket will add USD 41 billion of sales between 2025 and 2029 (≈8.7% CAGR). Key trends fueling this include the aging ICE fleet (higher parts consumption per vehicle) and shifting demand toward EV-specific components.

These changes come against a backdrop of global economic pressures and trade policies. Recent U.S. 25% tariffs on imported vehicles and parts (from April–May 2025 onward) have been introduced, with partial offsets for U.S.-assembled vehicles. Conversely, consumer preference for lower-cost alternatives is boosting the independent aftermarket (IAM). As one industry report notes, “the aftermarket is booming” as consumers seek **cost-effective alternatives to OEM parts amid inflationary pressures”. In this report we analyze pricing trends (OEM vs. aftermarket, ICE vs. EV), supply-chain factors (tariffs, sourcing, logistics), and emerging trends (EV parts demand, digitization) shaping the U.S. parts market through 2025–2026.

Pricing Trends by Part Category

Parts pricing varies widely by category. Traditionally, OEM (original-equipment) parts are significantly more expensive than aftermarket parts of similar function. For example, one study notes that “OEM parts cost about 60% more than aftermarket car parts”jdpower.com, due to brand premiums and dealer mark-ups. In practice, replacing a brake pad or alternator with an OEM unit often runs many tens of percent higher than a quality aftermarket substitute. Consumers and fleets generally pay the price premium for OEM parts when warranty or high reliability is needed, but turn to cheaper aftermarket parts (when available) to save costsjdpower.com.

The pricing trend for each category over 2025–26 is influenced by inflation, tariffs, and technology shifts. The table below summarizes expected price directions:

Key points: Gas vs EV parts pricing diverge. EV maintenance tends to cost less overall (fewer moving parts), but EV parts per unit (batteries, motors) are more expensive than any single ICE component. Notably, EV battery pack costs have plummeted (e.g. cobalt and lithium costs are ~75% below their 2022 peaksspglobal.com), putting downward pressure on one of the costliest EV parts. On the other hand, ICE-specific parts (spark plugs, filters, engine components) are stable but still subject to commodity and tariff-driven inflation. OEM-to-aftermarket price gaps will likely persist; as JD Power observes, vehicle owners often pay “25–50% more up to double or triple” for OEM vs. aftermarket partsjdpower.com, a gap which is unlikely to shrink significantly by 2026 unless competitive pressures intensify.

Supply Chain Disruptions and Improvements

The auto parts supply chain will be shaped by trade policies, domestic investments, and logistics changes.

• U.S. Tariffs (Section 232) – Effective April–May 2025, the U.S. imposed 25% tariffs on imported cars and many auto parts. These tariffs will directly raise the cost of parts sourced from abroad. However, the administration has allowed U.S. assemblers to apply for an “offset” on parts imported for U.S. vehicle production: for April 2025–Apr 2026 vehicles, automakers can claim 3.75% of aggregate MSRP back (2.5% in 2026–27) against the parts tariff. This effectively means that for vehicles with ≥85% domestic content, no net tariff is owed in year one. In practice, few automakers achieve 85% U.S. content today. Without offsets, the 25% tariff on parts would significantly raise OEM part costs, leading to manufacturer and dealer price hikes. These policy shifts have already depressed new-car production (projected ~15.2 million U.S. sales in 2025) and will likely push more demand to repairs and used cars. Industry sources predict a “strong tailwind” for aftermarket sales as tariffs raise vehicle prices.

• North American Trade (USMCA, Canada/Mexico) – The U.S. tariffs on imports extend to Canadian and Mexican suppliers. Canada responded by imposing 25% tariffs on $30 billion of U.S. goods (including steel/aluminum and potentially autos). Starting April 3, 2025 Canada will also apply 25% tariffs on U.S.-made vehicles lacking sufficient North American content. These reciprocal moves introduce new costs and uncertainty in the continental supply chain. Parts manufacturers that previously shipped cross-border may now face sudden tariff burdens, incentivizing near-shore sourcing but also causing short-term disruptions.

• China Trade Measures – Geopolitical tensions with China have targeted key auto materials. China has threatened high tariffs on U.S. imports (up to 245%) and has already restricted exports of strategic materials. Notably, in 2024 Beijing imposed export bans on 7 rare-earth elements used in magnets and electronicsbbc.com. Rare-earths (dysprosium, neodymium, etc.) are critical for EV traction motors and other components. With ~92% of rare-earth refining capacity in Chinabbc.com, any Chinese export control can sharply drive up EV motor costs. U.S. parts makers are thus monitoring such risks closely. Meanwhile, U.S. proposals to add China to the auto tariff list (as reported) could trigger further tit-for-tat measures. Supply chains for batteries and chips are also at risk: for example, additional tariffs (or export controls on semiconductor equipment) could slow chip deliveries, though recent reports suggest auto chip supplies have largely stabilized compared to 2020–21 shortages.

• Domestic Reshoring and Investment – Government incentives are boosting U.S. parts production. The Inflation Reduction Act and CHIPS Act funnel billions into domestic manufacturing. For instance, the DOE’s Domestic Manufacturing Conversion Grants program is negotiating ~$1.8 billion in awards to retool idle facilities for EVs and parts (from EV truck batteries to hybrid powertrains). States are also funding upgrades to existing suppliers. These programs aim to strengthen U.S. supply chains and create jobs. As a result, automakers and tier‑1 suppliers are expanding North American capacity (e.g. new battery plants, electric motor factories). In procurement, analysts note a shift from global “lowest-cost” sourcing to “tariff-insulated” sourcing, and some back-up capacity is being built to avoid lean supply chains. The net effect should be a slower, but more resilient, parts supply chain by 2026, less exposed to distant disruptions.

• Logistics and Distribution – The automotive logistics network is also evolving. Many parts distributors are digitizing inventory and fulfillment. For example, Stellantis just opened a new Mopar parts distribution center in New York with automated retrieval, improving speed and availability. E-commerce platforms (Amazon, eBay, specialized marketplaces like CarParts.com) continue to grow, pushing parts retailers to offer same/next‑day delivery and real-time stock info. These trends improve parts availability and shorten order lead times, especially for frequently demanded wear items. However, labor shortages at ports and trucking could still cause sporadic delays or cost hikes in 2025.

The table below summarizes key supply-chain factors and their impacts:

test

Emerging Industry Trends

Several broader trends will reshape the parts market:

• Growth of EV Aftermarket Services: As EVs proliferate, maintenance needs shift. EVs have no spark plugs or oil filters, but they require battery diagnostics, cooling system service, inverter repairs, and charging infrastructure maintenance. Fleets (e.g. delivery trucks, busses) are adopting EVs for sustainability, creating new niche parts demand. Experts predict rapidly rising demand for EV-specific components and services; aftermarket players investing in EV training and equipment stand to gain market share.

• Right-to-Repair and Parts Access: Regulatory moves (both U.S. and Europe) favor independent repairers gaining access to parts and technical data. S&P analysts note that in the U.S. the OEMs still dominate parts distributionspglobal.com, but a growing right-to-repair movement may open up more supply of parts (OEM or aftermarket) to consumers and independents, potentially lowering costs and raising aftermarket competition.

• Domestic Sourcing and Supply Security: Linked to tariffs and policy, OEMs and suppliers are near-shoring to insulate against trade shocks. The new “most tariff-insulated cost” mindset is encouraging procurement from within North America (US/USMCA) even if landed costs are higher. Over time, this could raise the U.S. content in vehicles and parts — qualifying more models for EV tax credits — but will also tie local parts prices to domestic wage and raw material inflation.

• Aftermarket Consolidation and Digital Platforms: The parts distribution sector continues to consolidate (mergers, private equity), aiming for scale. At the same time, digital platforms (e.g. RevolutionParts, PARTLogix) are linking catalogs and inventory in real time, enabling direct-to-business and direct-to-consumer sales. This means more transparent pricing and faster fulfillment. Tech-driven logistics (warehouse automation, predictive analytics) are emerging to reduce stockouts and improve route efficiency.

Forecast Summary

By the end of 2026, we expect:

• Parts pricing: Aftermarket part prices will rise modestly with inflation and higher volumes (tailwinds from tariffs and an aging fleet), but remain significantly below OEM pricesjdpower.com. OEM part prices (especially ICE components) may climb further due to tariffs and supplier cost pressures, whereas EV part costs (notably batteries) should trend downward or stabilize as technology costs fallspglobal.comspglobal.com. The overall effect is a widening gap between expensive OEM parts and cheaper aftermarket goods.

• Supply resilience: The new tariffs and trade frictions introduce short-term chaos, but they also accelerate the transition to more resilient sourcing. U.S. policy and industry investment will gradually bolster domestic parts production (especially EV-related parts). Inventory strategies will adapt (less “just-in-time”), and logistics will become more agile. That said, global uncertainties (trade wars, material shortages) will likely cause episodic spikes in some part costs (e.g. rare-earth motors, semiconductor components).

• Market composition: As new-car sales slow (tariffs or economic factors) and the existing fleet ages, consumers and fleets will increasingly rely on older vehicles. This extends the “repair sweet spot” to higher mileage (as Lang Marketing notes). In practice, that means higher volumes of parts needed per year, benefiting both OEM and aftermarket suppliers. Within this, the fraction of EVs (and EV parts) will climb – small in percentage but large in absolute growth (potentially adding millions of EVs on U.S. roads by 2026). Aftermarket providers investing in EV capabilities are expected to capture a growing share of repairs for these vehicles.

Overall, industry sources forecast that the U.S. car parts market will continue growing through 2025–26, driven by fleet aging and EV adoptioncoxautoinc.com. Tables and forecast charts from market analysts (shown below) highlight these trends:

• Table 1 (Pricing Trends): Summarizes projected price directions by part category (OEM vs aftermarket; ICE vs EV) with driving factors (see above).

• Table 2 (Supply-Chain Factors): Lists major supply disruptions/improvements (tariffs, reshoring, materials, logistics) and their expected impacts.

Together, these trends point to an automotive parts landscape where inflationary and tariff pressures push up part costs, EV-specific components grow in share, and digitization/reshoring strengthen domestic logistics and manufacturing. Parts suppliers, dealers, and fleets will need to adapt pricing, inventories, and technology (diagnostic tools, online sales channels) to navigate this complex environment.

Sources: Industry reports and databbc.comjdpower.comspglobal.com, including forecasts for aftermarket growth, tariff analyses, EV adoption trendscoxautoinc.com, and parts pricing indexesfred.stlouisfed.orgfred.stlouisfed.org.

•  

• 
  Parts pricing: Aftermarket part prices will rise modestly with inflation and higher volumes (tailwinds from tariffs and an aging fleet), but remain significantly below OEM pricesjdpower.com. OEM part prices (especially ICE components) may climb further due to tariffs and supplier cost pressures, whereas EV part costs (notably batteries) should trend downward or stabilize as technology costs fallspglobal.comspglobal.com. The overall effect is a widening gap between expensive OEM parts and cheaper aftermarket goods.

• Supply resilience: The new tariffs and trade frictions introduce short-term chaos, but they also accelerate the transition to more resilient sourcing. U.S. policy and industry investment will gradually bolster domestic parts production (especially EV-related parts). Inventory strategies will adapt (less “just-in-time”), and logistics will become more agile. That said, global uncertainties (trade wars, material shortages) will likely cause episodic spikes in some part costs (e.g. rare-earth motors, semiconductor components).

• Market composition: As new-car sales slow (tariffs or economic factors) and the existing fleet ages, consumers and fleets will increasingly rely on older vehicles. This extends the “repair sweet spot” to higher mileage (as Lang Marketing notes). In practice, that means higher volumes of parts needed per year, benefiting both OEM and aftermarket suppliers. Within this, the fraction of EVs (and EV parts) will climb – small in percentage but large in absolute growth (potentially adding millions of EVs on U.S. roads by 2026). Aftermarket providers investing in EV capabilities are expected to capture a growing share of repairs for these vehicles.

Overall, industry sources forecast that the U.S. car parts market will continue growing through 2025–26, driven by fleet aging and EV adoptioncoxautoinc.com. Tables and forecast charts from market analysts (shown below) highlight these trends:

• Table 1 (Pricing Trends): Summarizes projected price directions by part category (OEM vs aftermarket; ICE vs EV) with driving factors (see above).

• Table 2 (Supply-Chain Factors): Lists major supply disruptions/improvements (tariffs, reshoring, materials, logistics) and their expected impacts.

Together, these trends point to an automotive parts landscape where inflationary and tariff pressures push up part costs, EV-specific components grow in share, and digitization/reshoring strengthen domestic logistics and manufacturing. Parts suppliers, dealers, and fleets will need to adapt pricing, inventories, and technology (diagnostic tools, online sales channels) to navigate this complex environment.

Sources: Industry reports and databbc.comjdpower.comspglobal.com, including forecasts for aftermarket growth, tariff analyses, EV adoption trendscoxautoinc.com, and parts pricing indexesfred.stlouisfed.orgfred.stlouisfed.org.

Citations

U.S. Electric Vehicle Sales Increase More Than 10% Year Over Year in Q1: GM Drives EV Growth While Tesla Declines - Cox Automotive Inc.

https://www.coxautoinc.com/market-insights/q1-2025-ev-sales/

Aftermarket vs Manufacturer Car Parts

https://www.jdpower.com/cars/shopping-guides/aftermarket-vs-manufacturer-car-parts

Producer Price Index by Industry: Automotive Parts and Accessories Retailers (PCU4413144131) | FRED | St. Louis Fed

https://fred.stlouisfed.org/series/PCU4413144131

Where are EV battery prices headed in 2025 and beyond? | S&P Global

https://www.spglobal.com/automotive-insights/en/blogs/2025/01/where-are-ev-battery-prices-headed-in-2025-and-beyond

Where are EV battery prices headed in 2025 and beyond? | S&P Global

https://www.spglobal.com/automotive-insights/en/blogs/2025/01/where-are-ev-battery-prices-headed-in-2025-and-beyond

Where are EV battery prices headed in 2025 and beyond? | S&P Global

https://www.spglobal.com/automotive-insights/en/blogs/2025/01/where-are-ev-battery-prices-headed-in-2025-and-beyond

Five cards China holds in a trade war with the US

https://www.bbc.com/news/articles/c0kxe1m1y26o

Five cards China holds in a trade war with the US

https://www.bbc.com/news/articles/c0kxe1m1y26o

Automotive aftermarket industry trends 2025: Key insights | S&P Global

https://www.spglobal.com/automotive-insights/en/blogs/automotive-aftermarket-industry-trends-2025

Producer Price Index by Industry: Motor Vehicle Parts Manufacturing (PCU33633363) | FRED | St. Louis Fed

https://fred.stlouisfed.org/series/PCU33633363

All Sources