Toyota, a household name in American driveways, is hiking prices on new vehicles, and you’re footing the bill. This isn’t just a one-off; it’s a direct result of sweeping tariff policies shaking up the auto industry. Let’s unpack why your next car might cost more than you planned.
According to the Daily Mail, Toyota will raise prices starting in July, joining a growing list of automakers forced to pass on costs from a hefty $1.3 billion tariff burden imposed by the U.S. government.
Back in March, a 25% tariff hit all vehicles and car parts entering the U.S. market. A slight easing of the policy a month later gave companies a breather to shift production domestically, but the damage was done. The regulatory whiplash has left the auto sector reeling with uncertainty.
Toyota had been sounding the alarm since late May, hinting at inevitable price increases. Now, the numbers are out: expect an average hike of $270 per Toyota vehicle and $208 for its luxury brand, Lexus. It’s not pocket change when the average new car already costs over $49,000.
Other automakers are in the same boat, reacting to the same tariff pressures. Ford slapped a whopping $2,000 increase on models like the Mustang Mach-E and Bronco Sport, though they claim it’s tied to design updates—analysts aren’t buying it. Subaru’s hikes range from $750 to $2,055, depending on the trim.
BMW and Mitsubishi aren’t sitting idle either. BMW is upping prices by 1.9% on its gas-powered 2026 models, while Mitsubishi announced a 2.1% increase. Mitsubishi even delayed vehicle releases at U.S. ports before deciding to push them to dealers.
“[Business is] not sustainable longer term without significant price increases,” said Mark Templin, Toyota’s chief operating officer for North America. “And the industry already has an affordability problem,” Templin added. When new cars are near record highs and insurance premiums are climbing, these hikes sting even more.
The uncertainty around tariffs is a major sticking point. “The policy has been erratic and remains uncertain,” noted Neil Saunders, a retail expert at GlobalData. No one knows if relief is coming or if costs will climb higher.
Some executives are staying tight-lipped for now. “There isn’t enough clarity [about tariffs] to know what we can ask our customers to pay,” said an anonymous American CEO. It’s a gamble for companies and consumers alike.
Meanwhile, Mitsubishi’s spokesperson Jeremy Barnes confirmed, “[The increase] is based on our most recent evaluation across the industry.” He also assured, “There will be no adjustments to vehicles already in dealer inventory.”
At least the existing stock is safe, for now. The financial hit to automakers is staggering. GM anticipates shelling out $4 billion to $5 billion on tariffs this year alone, while Ford projects a bill between $1 billion and $2.5 billion. These are costs that inevitably trickle down to buyers.
What does this mean for you? If you’re in the market for a new car, brace for sticker shock—and not just from Toyota. With industry-wide hikes, shopping around might not save you much.
From a free-market perspective, these tariffs distort natural pricing mechanisms. Government intervention is forcing companies to raise costs or rethink production, often at the expense of efficiency. It’s a classic case of policy overreach disrupting consumer choice.
Consider delaying big purchases if possible, or look into used vehicles to sidestep these hikes. For wealth-builders, this is a reminder to diversify—don’t let a car payment derail your savings or investment goals. Stay frugal, stay sharp, and keep an eye on how these policies unfold.