100% Semiconductor Tariffs Could Drive U.S. Car Prices Even Higher

The U.S. automotive industry has been in a tariff-induced tailspin for months, thanks to a wave of import duties that have already cost automakers nearly $12 billion. Now, President Donald Trump has added a new twist: a proposed 100% tariff on imported semiconductors—the tiny but critical microchips that control everything from your power windows to your advanced driver assistance systems.

Why This Matters for Car Buyers

Every modern vehicle contains 1,000 to 3,000 semiconductors. These chips run your infotainment screen, manage your engine, monitor your tire pressure, and basically keep 100-percent-semiconductor-tariff-impact-car-pricesyour car from being a very expensive lawn ornament. If you remember the COVID-era chip shortage, you know exactly how bad things can get when supply is disrupted. Now, instead of a shortage, we could be looking at a cost explosion.

Industry experts are blunt: automakers aren’t going to eat these extra costs. A 100% tariff on chips means the prices on your next car’s window sticker are going up, possibly by thousands, regardless of whether you’re buying a budget commuter or a luxury SUV.

Trump’s Goal vs. Industry Reality

Trump says the tariff will be waived for companies that already manufacture semiconductors in the U.S. or commit to doing so. It’s part carrot, part stick—meant to lure foreign chip makers to build stateside.

Sounds straightforward, until you realize a chip fab takes years to build and costs around $10 billion to open. The U.S. is already building more fabs thanks to the CHIPS and Science Act signed under Biden, which pumped $280 billion into domestic semiconductor production. But most of those plants are still under construction and years away from pumping out chips. Even if new companies rushed in tomorrow, your 2028 model-year car might be the first to benefit.

In other words: these latest tariffs could hike car prices long before they help domestic production.

Automakers Are Already Hurting

Toyota projects a 44% decline in net profit this fiscal year, largely due to tariffs. UAW workers may see their smallest profit-sharing checks in over a decade. And brands with significant Chinese production—like Polestar—are already pulling certain models from the U.S. market due to the 100% tariff on Chinese-built EVs.

The semiconductor tariff would add another heavy layer to an already creaking industry. And while tariffs may ultimately encourage more “Made in America” parts, in the short term, the bill will land squarely in consumers’ laps.

The Bottom Line

This isn’t a drill. A 100% tariff on semiconductors will make cars more expensive, full stop. The industry can’t simply switch suppliers overnight, and even if domestic chip plants are coming, they’re years away from mass production. So if you’re car shopping in the next few years, expect to either pay more or get less—less tech, fewer features, or both.

🚗 Don’t get priced out by tariff chaos. Before you drop thousands extra thanks to political shenanigans, let me help you find the right car at the right price—without the dealership bullshittery™. Check out my Car Buying Service and let’s put you in the driver’s seat.