If you’ve been planning to buy a car or SUV from Subaru, we have some bad news. You may be paying as much as $750 to $2,055 more by next month, according to one dealer website notice, as part of the Japanese automaker’s response to 25% tariffs imposed by the US on foreign auto parts.
Subaru cited “market conditions” in passing on price increases to customers, as reported earlier by Reuters. “The changes were made to offset increased costs while maintaining a solid value proposition for the customer. Subaru pricing is not based on the country of origin of its products,” the company told Reuters in a statement.
Earlier this month, Ford also increased prices due to tariffs. GM said at the time that the impacts of tariffs will cost the company an estimated $5 billion.
What’s next for buying cars?
The move by Subaru is another signal that tariff-driven price increases are here to stay, and unfortunately, they may not come down.
“I would expect them to be permanent,” said Patrick Penfield, a professor of supply chain practice at Syracuse University’s Martin J. Whitman School of Management. “When automobile prices go up its rare that they come down; we saw this with the COVID pandemic. Prices went up and did not come down when it ended.”
Penfield says that automakers are not simply raising prices 25% across the board to pass on tariff costs. Instead, he said, “Many are negotiating with suppliers to split tariff costs, some are changing materials that have a lower tariff impact, others are importing similar parts from other countries with a lower tariff rate, some are resourcing domestically to avoid tariffs.”
But, ultimately, Penfield says, “All of the automakers will pass along some of the tariff costs to customers.”
As for the idea that tariffs will drive auto manufacturing back to the US, he says that’s unlikely in the short term due to a number of factors including factory and labor costs.
“You will see some automakers try as much as they can to source domestically, but it will take years for that to happen.”