WASHINGTON — President Donald Trump announced a new 25% tariff on all cars and auto parts imported into the United States, a move set to take effect this week that could significantly impact rental car companies and drive up prices for consumers.
The tariff, unveiled Wednesday, aims to boost domestic auto manufacturing but is expected to raise costs for vehicles produced outside the U.S., including popular models from Nissan, Kia, and Toyota. These brands are staples in the fleets of major rental car companies like Hertz, Enterprise, and Avis, which rely heavily on affordable, foreign-made cars to keep operations cost-effective.
Industry analysts predict the tariff will add between $4,000 and $10,000 to the price of imported vehicles, depending on the model. Cox Automotive estimates that a vehicle with a current landed cost of $25,000 could see an additional $6,250 tacked on, a cost likely passed on to consumers. Rental car companies, which purchased roughly 1.7 million vehicles in 2024 according to the American Rental Car Association, face a potential hit to their bottom line as nearly half of U.S. car sales last year were imports.
Nissan, Kia, and Toyota, all of which produce significant portions of their U.S.-market vehicles abroad, will be particularly affected. Nissan’s Sentra and Kicks, Kia’s Soul and Seltos, and Toyota’s Tacoma and RAV4—common sights at rental counters—are largely manufactured in Mexico, Japan, or South Korea. Toyota, for instance, builds all Tacoma pickups in Mexico, while Kia assembles many models in South Korea, and Nissan sources vehicles like the Versa from Mexico.
Rental industry leaders expressed concern over the tariff’s ripple effects. “We depend on brands like Nissan, Kia, and Toyota for their reliability and affordability,” said Porter Muligan, a rental car franchisee. “A 25% tariff forces us to either absorb these costs or raise rates, and in a competitive market, it’s the customer who’ll feel it most.”
Stock markets saw a small climb amid the the announcement.
Hertz jumped 23.8% and Avis Budget gained 23% after both firms lost nearly half of their value in the past year. Both Avis and Hertz are popular among short sellers, investors that bet on a stock’s decline, with 13% and 14.5% of their respective outstanding shares in short positions, per data.
Analysts agree prices will climb. Rental rates could rise 15% to 20% within months as companies adjust to higher acquisition costs, Muligan said. “With demand steady and supply chains disrupted, rental car prices could jump from an average of $45 a day to $55 or more by summer.”
The White House defends the policy as a boon for American jobs. “This tariff will bring factories back to the U.S.,” Trump said during a March 26 Oval Office address. “If foreign car prices go up, people will buy American.” However, critics argue the immediate impact will be felt by consumers and businesses like rental agencies, not manufacturers, who can’t shift production overnight.
Hertz, which reported a fleet of over 500,000 vehicles in 2024, declined to comment specifically but noted it is “evaluating options” to mitigate the tariff’s impact. Enterprise Holdings, parent company of Enterprise, Alamo, and National, signaled it may diversify its fleet with more U.S.-made models, though such a shift could take years.
For now, rental car customers may face sticker shock as companies pass on costs. “It’s a tough spot,” Muligan added. “We’re looking at a price hike no one wants, but the math doesn’t leave much choice.”