President Donald Trump's 25% tariffs on imported vehicles have officially taken effect, sparking widespread concern and chaos within the auto industry. The tariffs, which were announced earlier this year, are expected to raise the prices of new cars by $5,000 to $10,000, according to analysts.

The tariffs have been met with widespread criticism from industry experts, who argue that they will have devastating consequences for both car manufacturers and consumers. Dan Ives, global head of technology research at Wedbush Securities, described the tariffs as "a debacle of epic proportions" for the auto industry, noting that even cars produced domestically rely on a complex supply chain that runs across borders and through multiple nations.

The average car contains roughly 30,000 individual parts, with 40-50% of those parts sourced from abroad, according to Ives. This means that even American-made cars will be affected by the tariffs, leading to increased production costs and, ultimately, higher prices for consumers. Anderson Economic Group predicts that the tariffs could boost manufacturing costs by $4,000 to more than $10,000 per car, depending on the vehicle model.

The impact of the tariffs will be particularly felt at the lower end of the market, where many of the most affordable vehicles are produced outside the US. Erin Keating, executive analyst at Cox Automotive, notes that slapping tariffs on these vehicles would "drastically" change the dynamics, pushing sticker prices up by an average of $5,300. This could have significant consequences for car buyers, who are already struggling with elevated costs and financial stress.

According to Edmunds, one in five new car buyers are taking on seven-year loans to finance a new car purchase, and an increasing number of people with car loans owe more than their vehicle is worth. The tariffs are likely to exacerbate these issues, making it even harder for people to afford a new car.

In response to the tariffs, some automakers are offering short-term incentives to panicked shoppers. Ford, for example, is offering employee discounts on most models, including the Mustang Mach-E and Maverick, both of which are built in Mexico. Hyundai, meanwhile, has announced a $21 billion investment in the US to stave off the effect of the tariffs.

Other companies are taking a more drastic approach. Stellantis has announced that it will temporarily lay off 900 workers at five of its US factories and pause production at assembly plants in Canada and Mexico. Even Tesla, which assembles its vehicles in the US, is exposed to the tariffs, as 20-25% of its parts are sourced from Mexico.

The tariffs are likely to lead to more automakers trying to negotiate deals or exemptions with the administration. As the situation continues to unfold, one thing is clear: the auto industry is in for a wild ride, and consumers will likely bear the brunt of the impact.

In the midst of the chaos, some experts are advising against panic shopping, urging consumers to wait and see how the situation develops. Jake Fisher, senior director of Consumer Reports' Auto Test Center, notes that even if the tariffs are here to stay, the value of trade-ins will increase over time.

As the auto industry struggles to come to terms with the new tariffs, one thing is certain: the consequences will be far-reaching and profound. With car prices set to soar, the American dream of car ownership may be about to become a whole lot more expensive.