Colorado’s auto industry, from dealerships to manufacturers, is facing an unpredictable future. As President Donald Trump’s trade war with Canada and Mexico continues to create whiplash in policy decisions. After announcing a 25% tariff on goods from these two major trading partners, including auto imports and parts, the administration delayed portions of the plan, offering a one-month exemption for vehicles under the USMCA trade deal. However, the mixed signals from Washington have left businesses scrambling to prepare for rising costs, potential supply chain disruptions, and an uncertain economic climate.
For local dealerships like Phil Long Dealerships, which operates across Colorado, the back-and-forth on tariffs is making it impossible to predict vehicle pricing. CEO Kevin Shaughnessy noted that cars built under the existing U.S.-Mexico-Canada Agreement (USMCA) are part of an interconnected supply chain, where parts often cross borders multiple times before final assembly.
“There are parts that might be manufactured in the U.S. and then exported to Canada for partial assembly, and then partial assemblies arrive back in the U.S., have more parts put on, and they might be shipped back to Canada for final assembly and come back.”
If a trade war eventually takes full effect, each of these border crossings could trigger additional fees, driving up the final cost of a vehicle.
With tariffs looming, Colorado dealerships are already taking preemptive action to soften the financial impact. Shaughnessy confirmed that dealerships are stockpiling parts ahead of the tariff deadline to keep costs manageable for as long as possible.
“The parts that we’re buying now are pre-tariff. They don’t spoil, so we can keep them on the shelves. It ties up some money, but it allows us to protect the pricing on our vehicles a little longer.”
This strategy offers temporary relief but doesn’t eliminate the long-term pricing concerns that will surface once current inventory runs out and new, tariff-affected vehicles hit the market.
Estimates suggest that tariffs on Canadian and Mexican auto imports could add anywhere from $4,000 to $14,000 to the price of a new car, depending on the make and model.
The average new car price in the U.S. is already approaching $49,000, and additional tariffs could push that even higher. This increase comes at a time when many Coloradans are already struggling with affordability, as wages fail to keep pace with inflation.
For Colorado drivers in the market for a new car, waiting could be costly. Skyler McKinley, regional spokesperson for AAA, warns that consumers should lock in their purchases now before the tariffs take full effect.
“If you’re in the market for a new car, now is a great time to buy it. I wouldn’t delay. Buy now before these tariffs go into effect.”
McKinley noted that dealerships and automakers can only hold out for so long before price increases are passed on to consumers. Once pre-tariff inventory is gone, buyers will face higher costs.
In addition to the 25% tariffs on vehicles and parts, the Trump administration has doubled down on steel and aluminum tariffs, raising duties to 50% on steel and 25% on aluminum imported from Canada and Mexico.
This move will further increase production costs for vehicles made in the U.S., making even domestically assembled cars more expensive.
Beyond rising prices, the long-term effects of the tariffs could reshape the way vehicles are manufactured and sold in the U.S.
The auto industry has relied on a deeply integrated North American supply chain since the 1960s. With manufacturing operations optimized to take advantage of the strengths of each country:
Trump’s tariffs threaten to disrupt this balance. Potentially pushing the U.S. into a supply chain crisis and forcing some companies to reevaluate their manufacturing strategies.
“The fact remains that the vertical integration of auto manufacturers across the continent dates back to 1965. These are generations of trade relationships, and they’re certainly not going to flip overnight,” McKinley said.
Trump has suggested that the tariffs are meant to curb illegal immigration and drug trafficking, but analysts believe the real motivation is to renegotiate the USMCA trade deal and pressure Canada and Mexico into conceding more U.S.-based production.
While the administration has delayed some of the tariffs for now, the threat of long-term trade disruptions remains. Colorado’s auto industry—along with consumers—must prepare for:
For now, Colorado’s auto dealers, manufacturers, and consumers are in a holding pattern. They are waiting to see whether tariffs will be enforced, delayed again, or modified further.
But one thing is clear: The costs of uncertainty are real. Whether it’s businesses stockpiling parts, dealerships scrambling to set vehicle prices, or consumers wondering if they can afford their next car, the tariff roller coaster shows no signs of slowing down.
For Colorado drivers, the best move may be to buy sooner rather than later—before tariffs drive up costs and limit options.
