Tariff Update: New-Car Prices, May 2026

The 15% import tariff on Japanese, Korean, and European vehicles that took effect April 3, 2026 has now been in force for six weeks. The headline fear, that sticker prices would jump $3,000–$5,000 overnight, hasn't materialized in full. Here's what's actually happened.

Who absorbed the tariff

Most major automakers moved quickly to absorb at least part of the tariff rather than pass it directly to consumers. A sharp price increase on already-inflated vehicles risks cratering transaction volumes, which is worse for the business than eating a margin hit.

Toyota and Honda are the most exposed. Both build the majority of their high-volume crossovers and sedans in Japan with final assembly for some models in the US. Toyota absorbed the tariff on Camry (assembled in Georgetown, KY), but the Camry-based RAV4 is subject to it for versions assembled in Japan. Honda's domestically built Pilot and Ridgeline are unaffected. The CR-V, partly assembled in Canada and partly in Indiana, has complex exposure.

Hyundai and Kia have benefited from their Georgia manufacturing campus. The IONIQ 5, EV6, and most high-volume crossovers from both brands are being assembled domestically, which sidesteps the tariff entirely. This has given both brands a significant pricing advantage in May.

European brands have largely passed through the tariff. BMW, Mercedes-Benz, and Audi vehicles assembled in Europe have seen MSRP increases of class="relative z-10",500–$3,000 on most models. The exception is BMW's Spartanburg, SC plant, which builds X3, X4, X5, X6, X7, and XM models domestically.

Where prices actually moved

Vehicle (imported build)	Pre-tariff MSRP	Current MSRP	Change
Toyota RAV4 (Japan build)	$29,900	$30,900	+ class="relative z-10",000 (partial absorption)
BMW 3 Series	$44,900	$47,200	+$2,300
Mercedes C-Class	$46,900	$49,400	+$2,500
Audi A4	$44,500	$47,000	+$2,500
Volvo XC60	$47,900	$50,600	+$2,700
Honda CR-V (Ohio build)	$32,800	$32,800	No change

Inventory dynamics

The tariff has created an unexpected inventory split. Domestically assembled vehicles, particularly full-size trucks (Ford F-150, Chevy Silverado, Ram 1500), Honda CR-V, Toyota Camry, and most Hyundai/Kia crossovers, are drawing down faster as buyers gravitate toward unaffected inventory. Imported vehicles, especially in the luxury segment, are sitting longer.

That sitting inventory is leading to some opportunity. Mercedes-Benz and BMW dealers, facing slower turns on tariff-affected inventory, are offering more flexibility on price than at any point in the last two years. If you want a German luxury vehicle and are willing to pay the higher sticker, dealers have room to negotiate that didn't exist six months ago.

What to expect through summer

The tariff structure is under review but no reversal has been announced as of publication. Manufacturers are operating as if it's permanent while lobbying for targeted exemptions. The most likely outcome through summer is:

• Domestically built inventory continues to move fast with minimal discount
• Imported luxury vehicles develop more dealer discount as turns slow
• Japanese/Korean mainstream imports remain in mild absorption mode, with some brands likely passing more of the cost through in Q3 refreshed pricing

For buyers: the tariff's most immediate benefit is at the luxury level, where dealer motivation on European vehicles has increased. For mainstream buyers, domestically assembled vehicles are the right call on value right now.

See automaker tariff refund programs for brands currently running customer-facing tariff compensation programs.