Perceived Protection: Tariff Spillovers to Product Substitutes in the Used Car Market

<jats:p>We study the spillover effects of the 2025 “Liberation Day” automotive tariffs on the untaxed U.S. used-car market. Using over eight million weekly listings and a VIN-based crosswalk identifying each vehicle’s country of assembly, we document an immediate and persistent 0.2–0.6% increase in the prices of foreign-brand used vehicles relative to domestic-brand vehicles. The effect is concentrated among the newest vehicles — the closest substitutes for new cars — consistent with demand-side substitution. We also find that foreign-brand vehicles produced in the U.S. appreciate as much as those assembled abroad, suggesting that the perceived foreignness of used vehicles may be largely independent of true production location. Neglecting tariff pass-through to untaxed product substitutes understates overall consumer incidence.</jats:p>